Equity-index futures predicted a lukewarm start for Hong Kong and a poorer start for Australia and Japan. The S&P 500 ended the day 0.7% down after reducing losses earlier.
Asian Markets Mirror Wall Street
Asian markets were on track to replicate a dismal US session in which bonds and stocks declined in tandem with a rush of corporate debt sales and concerns about budgets in the developed world.
Early Asia trade saw a 0.2% increase in US futures. After-hours trading saw Alphabet Inc. rise after a federal court decided that Google would not be compelled to sell its Chrome browser.
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Bond Yields Pressure Global Markets
Tuesday saw US 30-year bond rates approach 5%, which had an impact on tech stocks whose prices had risen from April lows. Gold reached a record high and the currency appreciated. Following news that Japan’s governing party will call for early party elections, the value of the yen declined.
Key economic data, US tariffs, Federal Reserve independence, monetary policy, and global fiscal forecasts are just a few of the issues that traders are battling. Just before what is often the worst month for stocks, the S&P 500 saw its smallest monthly increase since July 2024, suggesting that the stock market is at a turning point.
Global Debt Sparks Concern
In addition to several business sales, longer-dated global debt has sparked increasing worry after years of issuance made government deficits worse. As pressure built on Prime Minister Keir Starmer to control the budget, the pound fell and the yield on long-dated bonds in the UK reached its highest level since 1998.
According to Nomura, weak debt and deficit indicators in many nations as well as Fed-related worries in the US are putting serious pressure on long bonds.
Nomura Holdings Inc. analyst Andrew Ticehurst, who is headquartered in Sydney, said that “a break of 5% on the US 30-year would surely significantly raise the attention on these difficulties.”
Taiwan Chips, US Jobs
Taiwan Semiconductor Manufacturing Co. is going to be the talk of Asia after the United States revoked the company’s authorization to freely relocate essential equipment to its main chipmaking factory in China.
Meanwhile, US President Donald Trump said that his government will seek an expedited Supreme Court ruling to overturn a federal court decision that declared certain of his tariffs illegal.
This week, traders are closely watching key US labor market data for signals about economic growth and the Federal Reserve’s policy direction. In August, employers were not eager to hire, and the unemployment rate likely increased to a nearly four-year high, further indicating a more muted labor market.
US Economy Faces Slowdown
The significance of this week’s economic data will ultimately determine where rates stand by Friday’s closing, according to Ian Lyngen and Vail Hartman of BMO Capital Markets, despite the fact that there are several variables that might alter investors’ opinions of the job market in the meantime.
In terms of the economy, US industrial activity decreased in August for the sixth consecutive month, mostly due to a decline in output that indicates manufacturing is still hindered by increased import taxes.
Wages, Jobs Signal Outlook
According to Scott Helfstein of Global X, “the ISM manufacturing survey revealed that firms are mostly controlling staff rather than aggressively recruiting.” This might be a hint before Friday’s employment figures. Although the number of new employment is probably declining, significant changes to data over the previous several months may imply that the report—whether positive or negative—does not have much of an impact on investors.
Investors should closely monitor wage increases in Friday’s employment data, according to Helfstein.
He said, “Wages have been exceeding inflation, which is generally a favorable indicator for consumption.” “The majority of consumer behavior data has remained strong, notwithstanding a minor increase in defaults.”