Market Volatility Continues: Europe and Asia Under Pressure

The European markets are poised for a turbulent start on Wednesday after Asian stocks plummeted. Concerns about global economic growth have gained momentum once again, and the recent breathtaking rally in the AI sector has taken another hit. Futures on US and European stocks declined, while the broadest index for Asia-Pacific stocks outside Japan and the Japanese Nikkei recorded their worst trading day since August 5. Back then, concerns about a slowdown in the US economy and the unwinding of yen carry trades had shaken global markets. Historically, September is considered a poor month for stocks, and US investors seem to be continuing this tradition, having sent Wall Street into a dive following the Labour Day holiday. Analysts see no clear reasons behind the recent market plunge. Weak US manufacturing data might play a role, as well as bleak prospects for China’s economic recovery and a record sell-off at Nvidia. The loss of $279 billion in value at the AI flagship company weakened technology stocks in Asia on Wednesday. Japanese chip-testing equipment manufacturer Advantest, a supplier to Nvidia, lost 7%. Taiwan’s TSMC fell by 4%. In commodities, concerns over dwindling global demand led to a price drop in oil, which fell to its lowest level in nine months. China’s CNOOC led the decline in Hong Kong-listed oil stocks and was also on track for its largest percentage daily loss since August 5. Everything points to another turbulent market phase, with the data on US job openings on Wednesday expected to provide clues about the strength of the labor market. However, the focus remains on the US labor market report for August on Friday, which could be decisive for whether the anticipated Federal Reserve rate cut this month will be moderate or particularly substantial. Until then, investors will be walking on a knife-edge, and the current sell-off might not be the last.