Global stock markets, particularly futures for the S&P 500 and Nasdaq, are falling amid persistent inflation fears and geopolitical tensions. Following hotter-than-expected U.S. consumer price data, traders brace for new reports on producer prices, retail sales, and jobless claims, alongside corporate earnings. Asian and European markets also experienced significant declines, while oil prices dropped due to Middle East unrest, adding to investor apprehension.
U.S. equity futures experienced a downturn on Thursday morning as traders eagerly awaited a fresh wave of economic data and corporate earnings reports. This follows a challenging session previously, largely influenced by inflation figures surpassing expectations.
S&P 500 futures dipped by 0.31%, with Nasdaq-100 futures seeing a sharper decline of 0.83%. In contrast, Dow Jones Industrial Average futures showed a slight gain of 0.12%, or 63 points. This comes after the tech-heavy Nasdaq Composite recorded its worst day since July 23, shedding 1.9% in regular trading. The S&P 500 also suffered its most significant one-day slide since July 29, falling 1.1%, while the Dow proved relatively more resilient with a modest 0.1% drop.
Asian markets mirrored the cautious sentiment, with South Korea’s Kospi plummeting over 7.84%, notably dragged down by tech giants SK Hynix and Samsung Electronics. Japan’s Nikkei 225 was down 4.4%, Hong Kong’s Hang Seng Index declined 1%, Mainland China’s CSI 300 lost 1.41%, and Australia’s S&P/ASX 200 fell 0.85%.
Concerns are mounting over the Federal Reserve's potential for more aggressive monetary policy tightening before the year-end, spurred by September’s consumer price data revealing higher-than-anticipated year-over-year inflation. Jamie Cox, managing partner at Harris Financial Group, highlighted the persistent inflationary pressures, stating, "Inflation is cooking with gas," and suggested that global conflicts are a primary driver. He warned against the Fed repeating its 'transitory' error regarding the energy supply shock.
Investors anticipate further inflation insights today with the release of September’s producer prices at 8:30 a.m. ET, alongside new retail sales figures and weekly jobless claims. The corporate earnings season also continues, with major regional banks U.S. Bancorp and PNC, as well as Charles Schwab, scheduled to report.
UK economy beats expectations with 0.1% growth in August
The U.K. economy expanded by a better-than-expected 0.1% in August, surprising economists who had forecast a 0.1% contraction. This growth was primarily driven by production, which managed to offset weaker performances in the services and construction sectors. Following the announcement, the British pound strengthened by 0.4% against the U.S. dollar, and yields on U.K. government bonds (gilts) decreased across the curve.
European markets poised for lower open
European stock markets are expected to open lower on Thursday, with Stoxx 50 futures down 0.9%. Futures for the U.K.’s FTSE 100 were nearly 0.1% lower, while France’s CAC 40 was down 0.48%. Germany’s DAX is projected to open 0.39% in the red, and Italy’s FTSE MIB futures were off by 0.51%.
European chipmakers retreat in premarket trading
Tracking losses from their Asian counterparts, European chip manufacturers saw declines in premarket trading. Dutch semiconductor giant ASML fell 1.52%, Infineon Technologies shed 2.32%, and Germany’s Aixtron and SUSS MicroTec were down 2.8% and 3.5% respectively. This broad retreat in chip stocks across Asia and Europe is linked to concerns over AI financing and potential further interest rate hikes by the Federal Reserve, which previously affected Wall Street.
Oil prices slide amid Middle East tensions and IEA report
Oil prices dropped on Thursday as investors evaluated heightened tensions in the Middle East and analyzed the International Energy Agency’s (IEA) latest monthly report. Brent crude futures for December delivery decreased by 1.66% to $104.31 a barrel, while U.S. West Texas Intermediate futures for November fell 1.09% to $94.05 per barrel. A Singapore-registered ship sinking in the Strait of Hormuz sparked fears of a prolonged conflict, exacerbated by Iran's threats against U.S. warships. The IEA report cautioned that diesel market constraints could persist into next year, with attacks on Saudi Arabia further jeopardizing oil supply recovery.
Asian tech stocks plunge on AI funding and rate hike fears
A global sell-off in technology hardware stocks intensified in Asia, with major chipmakers experiencing significant losses. South Korean chip giant SK Hynix plunged over 10%, and rival Samsung Electronics fell 7.1%. Other South Korean chip-related companies like LG Innotek, Seoul Semiconductor, and Samsung SDI also saw drops. In Japan, tech investment giant SoftBank Group tumbled 7.9%, and semiconductor equipment makers Advantest, Tokyo Electron, and Renesas Electronics all declined by over 5%. These declines are primarily attributed to growing anxieties over the financing of artificial intelligence investments and the prospect of more aggressive Federal Reserve interest rate hikes.
South Korea’s Kospi leads Asia-Pacific market tumble
Asia-Pacific markets saw broad declines on Thursday, with South Korea’s Kospi index leading the losses, plunging 6.1% at open, and the small-cap Kosdaq Index falling 5.7%. Key components SK Hynix and Samsung Electronics dropped 9% and 7% respectively. Japan’s Nikkei 225 fell 3.2%, the Topix declined 1.8%, and Australia’s S&P/ASX 200 was down 0.71%.
Asia markets track Wall Street decline as inflation fears fuel rate hike speculation
Asia-Pacific markets were set to open lower on Thursday, mirroring Wall Street's previous session losses. This sentiment was driven by hotter-than-expected U.S. inflation data, which has heightened concerns that the Federal Reserve might accelerate interest rate hikes. Escalating attacks on commercial vessels in the Strait of Hormuz also contributed to market unease, adding uncertainty to the Middle East conflict and its implications for energy supplies. Hong Kong’s Hang Seng index futures indicated a decline from its previous close, as did Japan’s Nikkei 225 futures and Australia’s S&P/ASX 200 in its early trading hours.
Rocket Lab delays Neutron rocket launch; shares dip
Rocket Lab shares declined by approximately 7% in extended trading after the company announced a delay for its Neutron rocket launch until 2027. The delay stems from an identified issue in the manufacturing process of one of its propellant domes. The time required to build a new dome and resolve the manufacturing problem prompted the company to push back the first launch date.
CoreWeave sees further after-hours decline after 15% plunge
CoreWeave shares fell an additional 0.6% after the closing bell, following a significant 15.5% plunge during regular trading. This sharp sell-off in the company’s stock and bonds was fueled by market fears that some technology companies are over-leveraging for AI investments. CEO Mike Intrator, in an internal memo, dismissed the market’s reaction as irrational, expressing confidence in the company's backlog to support its debt obligations.
Stock futures open marginally changed
Early trading saw Dow Jones Industrial Average futures tick up by just 6 points, while S&P 500 futures and Nasdaq-100 futures both experienced marginal declines.
