Share markets in Asia slid on Monday after worries about a possible US economic downturn slugged Wall Street, while dragging bond yields and commodity prices lower as investors avoided risk assets for safer harbours.
Japan’s Nikkei bore the brunt of the early selling as a stronger yen pressured exporters, losing 2.4 per cent on top of a near 6 per cent slide last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.6 per cent, after losing 2.25 per cent last week.
S&P 500 futures and Nasdaq futures were both a fraction lower after Friday’s slide.
On Friday, Wall Street indexes closed sharply lower. The Dow Jones Industrial Average fell 410.34 points, or 1.01 per cent, to 40,345.41, the S&P 500 lost 94.99 points, or 1.73 per cent, to 5,408.42 and the Nasdaq Composite lost 436.83 points, or 2.55 per cent, to 16,690.83.
Fed fund futures were little changed as investors wondered whether the mixed US August payrolls report would be enough to tip the Federal Reserve into cutting rates by an outsized 50 basis points when it meets next week.
Investors are considerably more dovish and have priced in 115 basis points of easing by Christmas and another 127 basis points for 2025.
The prospect of global policy easing boosted bonds, with 10-year Treasury yields hitting 15-month lows and two-year yields the lowest since March 2023.
The 10-year was last at 3.734 per cent and the two at 3.661 per cent, leaving the curve near its steepest since mid-2022.
The drop in yields encouraged a further unwinding of yen carry trades which saw the dollar sink as deep as 141.75 yen on Friday before steadying at 142.41 early on Monday.
Data on consumer prices (CPI) from China due later on Monday are expected to show the Asian giant remains a force for disinflation, with producer prices seen falling an annual 1.4 per cent in August.
The CPI is forecast to edge up to 0.7 per cent for the year, from 0.5 per cent, mainly due to rising food prices. Figures on China’s trade account due Tuesday are expected to show a slowdown in both export and import growth.
Also on Tuesday, Democrat Kamala Harris and Republican Donald Trump debate for the first time ahead of the presidential election on November 5.
In commodity markets, the slide in bond yields kept gold restrained at $2,496 an ounce and short of its recent all-time top of $2.531.
Oil prices found some support after suffering their biggest weekly fall in 11 months last week amid persistent concerns about global demand.
Brent added 57 cents to $71.63 a barrel, while U.S. crude firmed 60 cents to $68.27 per barrel.
