- Stocks in Asia slipped on Wednesday amid renewed fears of a global economic slowdown.
- The Institute for Supply Management said U.S. manufacturing activity contracted to its worst level since June 2009. That report came on the back of the release of weak manufacturing data from Europe.
- Markets in China and India were closed on Wednesday for holidays.
Stocks in Asia slipped on Wednesday amid renewed fears of a global economic slowdown.
Elsewhere, Japan’s Nikkei 225 shed 0.49% to close at 21,778.61 as shares of index heavyweights Softbank Group and Fanuc dropped 2.67% and 2.22%, respectively. The Topix index also slipped 0.42% to finish its trading day at 1,596.29. Over in South Korea, the Kospi declined 1.95% to close at 2,031.91.
The S&P/ASX 200 in Australia ended its trading day 1.53% lower at 6,639.90 as most of the sectors declined. Shares of National Australia Bank dropped 2.29% after the lender announced Wednesday that it would incur additional charges of 1.18 billion Australian dollars ($791.96 million), which is expected to slash its cash earnings in the second half of fiscal 2019 by about 1.123 billion Australian dollars ($753.70 million) after tax.
Global PMIs pic.twitter.com/dIYHWMSOiT
— Win Smart, CFA (@WinfieldSmart) October 2, 2019
Returns of recent unicorns from the open on the day of their IPO:
The RealReal: -26%
— Market Crumbs (@MarketCrumbs) October 2, 2019
Factories and Construction …. Bad News
- This may come as a shock, but U.S. manufacturers are struggling…. mightily. The U.S. manufacturing ISM unexpectedly (but no one should be falling out of their chairs, really) contracted for the second month in a row, landing below the key 50 mark again. The headline dropped to a decade-low 47.8 in September
- Also note that the index has declined for six consecutive months, a streak not seen since 2015. Of the five equally-weighted components, it wasn’t pretty. Here are the key ones worthy of a mention. Sure new orders rose but the 0.1 pt increase was nothing to write home about… it is still sub-50 (or 47.8, lowest since April 2009). Production was down for the 3rd straight month (-2.2 pts to 47.3, also lowest since April 2009). Some GM impact here? Payrolls were trimmed for the 3rd consecutive month, down 1.1 pts to 46.3, lowest since January 2016. Keep that in mind ahead of Friday’s official jobs report.
- So what is going on? The trade war, clearly, is the biggest issue facing manufacturers (and others), with the hot/cold trade talks (cool right now) moving forward but tariffs still in place and rising. It was the start of September that the 15% tariff on $125 bln of China’s imports kicked in. And, more are coming on October 15 (then again on December 15) unless, of course, there’s some miraculous breakthrough during those high-level talks next week. Don’t hold your breath.
There hasn’t been this many central banks easing policy in nearly two decades. With the global economy under pressure from a U.S.-China trade war, monetary policymakers are expected to lower interest rates to arrest the escalation of growth worries.
Just in case you thought the ISM number was a flukey ‘transitory’ one-off, the New York City ISM just plunged, with the outlook collapsing to its lowest since Feb 2009.