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Equity markets rebound in Asia

While the global sell-off on equity markets intensified at the beginning of the week - driven by fears of a recession in the US, the risk of the Federal Reserve acting too hesitantly and the continuing pressure on the major technology stocks - stock markets in Asia started to recover on Tuesday. This should also support Europe's stock markets at the start of trading today. 

Date
Auteur
Alessandro Fezzi, LGT Research Content & Publications
Temps de lecture
5 minutes

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In Tokyo, the Nikkei 225 and the Topix started to recover after the massive losses of the last few days, rising by a good 10% at times. All other Asia-Pacific markets were also up. Japan's heavyweight trading houses recorded gains of over 8%, with Marubeni up over 12%. Softbank rose by almost 10%. Other sectors posting gains included Japanese automakers and semiconductor suppliers. Honda shares, for example, rose by over 16%. At the same time, the yen weakened again by just under 1% against the US dollar. The South Korean Kospi rose by over 4%, while the small-cap Kosdaq gained more than 5%. South Korean heavyweight Samsung Electronics rose by a good 2%, while chip manufacturer SK Hynix gained 4.5%. China's leading index, the CSI 300, was unchanged, while the Hang Seng Index in Hong Kong rose by just under 1%. The Australian S&P/ASX 200 posted a more moderate gain of around 0.4%. We expect the Reserve Bank of Australia to announce its interest rate decision later today. The key interest rate is expected to remain unchanged at 4.35%.

In New York, the pressure on tech stocks in particular continued

On Wall Street, the slide on Monday continued. The Dow Jones Industrial fell by 2.6% to 38,703.27 points and the broad-based S&P 500 fell by 3% to 5,186.33 points. On the Nasdaq, the indices recorded losses of just under 3%. Technology stocks, which had benefited from high expectations regarding artificial intelligence (AI), were once again under pressure. Nvidia, for example, saw its share price fall by around 6.5% yesterday. This was also due to media reports that the chip manufacturer had to postpone the launch of new AI chips due to design flaws. Apple lost just under 5% at the start of the week and Tesla shares were down around 4%.

On the bond market, the yield on ten-year US Treasuries initially fell to 3.70% and is now trading at 3.84% again.

Negative start to the week on Europe's stock markets

Against the backdrop of the slump on the Asian stock markets and the losses on Wall Street, the European share indices also continued their recent slide at the start of the week. The EuroStoxx closed 1.45% lower at 4,571.60 points. The SMI in Zurich lost 2.8% on Monday and in Frankfurt the Dax slipped by more than 3% at times, reaching its lowest level since February and falling below the 200-day moving average in places.

Sentiment in the US service sector has improved 

The ISM (Institute for Supply Management) purchasing managers' index rose to 51.4 points from 48.8 in June, indicating a significant improvement in sentiment among US service providers and growth in the sector. Analysts had expected an average of 51.0 points.

Financial experts and entrepreneurs in Europe are more pessimistic 

The analysts and institutional investors surveyed by the German financial market research company Sentix were much more skeptical about the economic outlook in the eurozone than they had been a month earlier. The Sentix economic indicator for August fell for the second month in a row, this time by 6.6 points to -14.9 points (consensus -8.0 points) and reached its lowest level since the beginning of the year. The survey was conducted from 1 to 3 August among 1,150 investors.

Business sentiment in the eurozone is also suffering from fears of recession and geopolitical uncertainties. The monthly Purchasing Managers' Index (PMI Composite) compiled by S&P Global fell from 50.9 points in June to 50.2, marking the second consecutive month of deterioration and the lowest level in five months. While the indicator for industry continues to point to a contraction in the sector, the service sector remains on course for growth.

Corporate and macroeconomic calendars

Corporate news in focus: Second-quarter figures from Bayer, Caterpillar, Uber.

Economic data in focus: Swiss unemployment rate, German industrial orders, Swiss retail sales, euro-area retail sales, US trade balance.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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