Global Markets Plummet Amid Growth Concerns, Tech Selloff

Asian shares and global stock futures declined significantly due to a tech selloff on Wall Street and concerns about U.S. economic growth. Japan's Nikkei led the downturn in Asia. Oil prices also hit multi-month lows, exacerbated by sluggish economic data from China and calls for further stimulus.

Asian shares and global stock futures took a significant hit on Wednesday as a tech selloff on Wall Street and renewed concerns over U.S. economic growth prompted a retreat from risky assets. Japan's Nikkei led the decline in Asia, plummeting over 3%, while the MSCI's broadest index of Asia-Pacific shares outside Japan fell by 1.6% in early trading.

September traditionally sees poor stock performance, but analysts noted a confluence of factors driving the rout, including weak U.S. manufacturing data. Wall Street closed sharply lower after the U.S. market reopened post-Labor Day, with AI frontrunner Nvidia slumping nearly 10% due to waning enthusiasm for artificial intelligence.

Chris Weston, head of research at Pepperstone, remarked, 'The air of portfolio de-risking as the U.S. cranked back up after the Labor Day holiday was seen across all areas within the capital markets.' Growth concerns were prominent, leading to substantial impacts on cyclical-sensitive assets and increased hedging activity.

U.S. stock futures continued their decline on Wednesday, with S&P 500 futures dropping 0.5% and Nasdaq futures down 0.75%. EUROSTOXX 50 futures fell over 1%, and FTSE futures were down 0.73%.

Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank, highlighted multiple factors contributing to the market turbulence, including Nvidia's performance, tech sector declines, weak U.S. data, and China's economic struggles.

China, the world's largest oil importer, has been grappling with an uneven economic recovery, sparking calls for further stimulus from Beijing. This uncertainty contributed to a drop in oil prices, with Brent crude futures falling to $73.32 per barrel and U.S. crude bottoming out at $69.83, marking their lowest levels since December. Both had already seen a 4% drop in the previous session.

Hong Kong stocks opened lower in response to regional trends, with the Hang Seng Index down 0.8% and China's CSI300 blue-chip index losing 0.6%.

This week, several key pieces of U.S. economic data are expected, including job openings, jobless claims, and the critical nonfarm payrolls report on Friday. These figures could influence the Federal Reserve's upcoming rate cut decision, which could be either modest or substantial depending on the labor market strength.

'Everyone's been cheering on the idea of rate cuts,' noted Tony Sycamore, a market analyst at IG. 'But the idea of having a rate cut isn't necessarily positive as it signifies weaker than expected economic conditions.'

Currency and U.S. Treasury movements were less dramatic than those in equities. The yen remained steady at 145.43 per dollar, while a rebound in the dollar pushed the euro away from recent highs. In commodities, spot gold rose slightly to $2,493.85 an ounce.

(With inputs from agencies.)