Stocks Fall as Payroll Data Add to Slowdown Fears: Markets Wrap

(Bloomberg) — Asia’s benchmark stock index slid to a three-week low as worse-than-expected economic data from the US to Japan added to concerns over a broader slowdown.

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The Nikkei 225 Stock Average slipped for a fifth day as a government report showed Japan’s economy grew less than analysts forecast. Chinese equities dropped and iron ore tumbled on signs of weakening demand. Benchmarks in Taiwan, Hong Kong and South Korea all fell more than 1%.

A soft US jobs market and other signs of slack in the world’s largest economy are damping risk appetite across Asia. Chinese consumer and producer prices data both fell short of forecasts Monday, while waning investor euphoria over chipmakers such as Nvidia Corp. added to headwinds.

“Asian stock markets, especially in tech-driven regions like Japan, Taiwan, and South Korea, are set to brace for a storm with their economies acutely sensitive to the brewing global downturn,” said Hebe Chen, an analyst at IG Markets Ltd. “If the dark clouds of a struggling US economy spread globally, risk-sensitive currencies like the Aussie could soon come under severe strain.”

September is proving a volatile month for markets with stocks and commodities both falling amid concern about waning global growth. Wall Street’s fear gauge – the Cboe Volatility Index – closed at its highest in a month on Friday after the jobs report.

The MSCI Asia Pacific Index fell as much as 1.8% with technology companies including Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and Tencent Holdings Ltd. among the biggest drags. Japan’s Topix index dropped nearly 3% on last week’s yen’s strength.

Key haven assets — Treasuries and the yen — both trimmed some of last week’s gains. The US two-year yield climbed three basis points to 3.68% after sliding 10 basis points on Friday.

The yen slipped 0.4% to 142.82 per dollar after jumping 0.8% Friday. The Philippine peso led losses in Asian currencies.

US nonfarm payrolls rose by 142,000 last month, below the median economist forecast of 165,000, the Bureau of Labor Statistics said Friday. The unemployment rate edged down to 4.2%, reflecting a reversal in temporary layoffs.

Iron ore slid to a 22-month low Monday — sinking below the $90-a-ton threshold — as a slump in demand in biggest buyer China drives losses. Futures have fallen by more than a third this year with pressure ramping up as flagging steel

Oil rose from its lowest close since 2021.

Traders will be keeping a close eye on US inflation data this week as worries mount the Fed has waited too long to cut rates as recession risks grow. Treasury Secretary Janet Yellen at the weekend sought to temper fears, seeing no “red lights flashing” for the financial system. Fed Governor Christopher Waller said he was “open-minded” about the potential for a bigger rate cut.

Fed policymaker comments following the jobs print “did not indicate a sense of immediate urgency in needing to cut interest rates by 50 basis points,” said Diana Mousina, deputy chief economist at AMP Ltd. in Sydney. “So, a 25 basis-point cut is more likely in September, with the risk of larger rate cuts if the data indicates the need for it.”

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