Last Night's Market Recap
S&P 500 - Heatmap
Overnight – Tech slumps led by Nvidia as recession signals pile up
The Nasdaq suffered its biggest one-day slump since the August global selloff, as an Nvidia slump triggered a sea of red across stocks ahead of the slew of economic data due this week including the monthly jobs report that will shape the Federal Reserve’s rate decision later this month. Share markets fell slightly on Monday as investors braced for a data-packed week culminating in a U.S. jobs report that could decide whether a rate cut expected this month will be regular or super-sized.
NVIDIA fell more than 9% leading chip stocks and broader tech sector to start the new trading month. The slide comes in the wake of the chipmaker’s results released last week that flagged concerns about slowing growth. Sidestepping the meltdown, however, Super Micro Computer rose more than 1% after announcing that it doesn’t anticipate any material changes to its Q4 or FY 2024 earnings results after delaying in filing its annual Form 10-K, the company said Tuesday. The stock fell sharply last Wednesday after the company said it delaying filing of the annual report, citing additional time to assess internal reporting controls.
Investors are returning from the Labor Day holiday, to a crucial week for the U.S. markets, with a slew of labour market data including job openings data on Wednesday, the jobless claims report on Thursday and the nonfarm payrolls for August due Friday. The previous month’s labour report fell short of expectations, prompting a sharp sell-off in risk assets, and investors will be looking to August jobs report to determine whether the weakness was transitory.
Some on Wall Street believe the weakness was a the start of a decline in labour market, and will likely be reflected in the August data, persuading the Fed to deliver a larger 50 basis point hike.
The doubts about the economy and the record valuations of US stocks couldn’t have come at a worse time for investors as September is seasonally the weakest month in both the S&P500 and the Nasdaq (see tables below)
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The Day Ahead
ASX SPI 7971 (-1.16%)
September has gotten off to a poor start, with the driver on the ASX the resources, which are already pricing in a global slowdown/recession.
Where the risk lies in our market is the overpriced Banks, Tech and consumer discretionary stocks which are still trading at (or near) record high PE (price to earnings) and PEG (price/earnings to forward growth) ratios. These sectors are currently pricing in economic prosperity and have significantly more downside than many of the mining stocks that have already been routed
