People pass the entrance for the Wall Street subway station on Tuesday, Sept. 2, 2024, in New York. (AP Photo/Peter Morgan)
New York, United States — Oil prices slumped more than four percent and global stocks retreated amid growth worries ahead of key US employment data later in the week.
Major US indices spent the entire day in the red, with the Nasdaq finishing down more than three percent following lackluster manufacturing data.
The Institute for Supply Management’s manufacturing index was 47.2 percent in August, up slightly from a month earlier, but still well below the 50-point mark separating expansion from contraction.
READ: Asian markets trading mixed as investors wait for key US jobs report
ISM officials said demand remained subdued, leading to a fifth straight month of contraction.
The stock market losses come ahead of major employment data later in the week that will have a say in upcoming US monetary policy decisions.
The prior jobs report sparked a brief but dramatic sell-off in US equities, elevating recession fears before subsequent economic reports bolstered confidence.
Another weak jobs report would be a “significant headwind,” said Art Hogan, chief market strategist at B. Riley Wealth.
“Then you have two in a row and you start to be concerned about the future of the economy and jobs,” Hogan said.
Analysts noted that September is an historically weak period for stocks.
“I think there’s just profit taking, kind of rebalancing going on there,” said Sam Burns, chief strategist of Mill Street Research. “And now that earnings season is over, there’s much less in terms of corporate news to drive things.”
Earlier, bourses in Europe and Asia also pulled back, while oil prices hit eight-month lows.
With oil producers reluctant to cut output — the OPEC oil cartel and its allies have even been considering boosting production — oil prices have been on a downward trend.
“The fact that recent data shows no signs of any acceleration in import demand in China, Europe or North America points to a situation where the oil market is not going to be as tight as expected a few months ago,” said market analyst Fawad Razaqzada at City Index and FOREX.com.
In foreign exchange, the yen strengthened after Bank of Japan chief Kazuo Ueda restated his intention to lift interest rates again if inflation and the economy meet its forecasts.
The bank’s surprise decision to hike in July, hours before the Federal Reserve indicated it was ready to begin cutting US borrowing costs, sparked a massive unwind of the so-called “yen carry trade” in which investors used the cheap currency to buy high yielding assets like stocks.
In company news on Tuesday, shares in Cathay Pacific slipped as the Hong Kong carrier said that 15 of its Airbus A350 jets needed new engine parts after inspecting its entire fleet, which was grounded following a “first of its type” engine component failure.
But shares in British engine manufacturer Rolls-Royce, whose Trent XWB-97 engines powered the planes, gained 2.4 percent after starting the week with a 6.5-percent drop as not all of Cathay’s A350s were affected.
Key figures around 2200 GMT
Brent North Sea Crude: DOWN 4.9 percent at $73.75 per barrel
West Texas Intermediate: DOWN 4.4 percent at $70.34 per barrel
New York – Dow: DOWN 1.5 percent at 40,936.93 (close)
New York – S&P 500: DOWN 2.1 percent at 5,528.93 (close)
New York – Nasdaq Composite: DOWN 3.3 percent at 17,136.30 (close)
London – FTSE 100: DOWN 0.8 percent at 8,298.46 (close)
Paris – CAC 40: DOWN 0.9 percent at 7,575.10 (close)
Frankfurt – DAX: DOWN 1.0 percent at 18,747.11 (close)
EURO STOXX 50: DOWN 1.2 percent at 4,912.52 (close)
Tokyo – Nikkei 225: FLAT at 38,686.31 (close)
Hong Kong – Hang Seng Index: DOWN 0.2 percent at 17,651.49 (close)
Shanghai – Composite: DOWN 0.3 percent at 2,802.98 (close)
Dollar/yen: DOWN at 145.46 yen from 146.92 yen on Monday
Euro/dollar: DOWN at $1.1047 from $1.1072
Pound/dollar: DOWN at $1.3111 from $1.3146
Euro/pound: DOWN at 84.17 pence from 84.22 pence