Daily Markets: Data-Dependent Markets Brace for Updates

Today’s Big Picture

Asia-Pacific equity markets finished the day mixed. India’s SENSEX rose 0.23%, and despite some weakness in Japan’s Iron and Steel sector, the Nikkei gained 0.30%. Both Taiwan’s TAIEX and South Korea’s KOSPI ended the day close to flat, up 0.01% and down -0.09%, respectively. Australia’s ASX All Ordinaries gave back 0.12%, China’s Shanghai Composite declined 0.71%, and Hong Kong’s Hang Seng fell 2.06% as Chinese property default risk overhang continues to pressure this market. Major European markets are lower in midday trading, and U.S. equity futures point to a lower open.

We'll hit the ground running this week with final Service PMIs from four key economic regions – Japan, China, the Eurozone, and the U.S. – which will bring updates to the global economy and inflation. These reports will offer a look into the health of these economies and how businesses are faring, which in turn will help investors divine what the Fed may or may not do at its upcoming policy meeting. Remember, the Fed has consistently said it'd be led by the data, so these numbers will matter to the markets. Read on to see how the international numbers are shaping up.

Data Download

International Economy

The au Jibun Bank Japan Services PMI stood at 54.3 in August, unchanged from a preliminary reading, and after a final 53.8 in July. It was the 12th consecutive month of growth in the service sector and the fastest pace since May, lifted by a sharper rise in new orders.

The Caixin China General Service PMI slipped to 51.8 in August from 51.9 in July, missing market forecasts of 53.6. It was the softest increase in services activity since the start of the year, amid mounting downward pressure on the economy. New order growth slowed while export sales fell for the first time since last December. On the price front, input cost inflation eased to a six-month low while cost inflation slowed to the lowest level since April amid tight market competition. China is set to launch a new state-backed investment fund that aims to raise about $40 billion for its semiconductor sector, including equipment for chip manufacturing.

The HCOB Eurozone Services PMI was revised lower to 47.9 in August 2023 from a preliminary of 48.3, pointing to the first decline in services activity so far this year, and the sharpest since February 2021. Input prices increased at the fastest rate in three months while inflation of prices charged eased to a 23-month low. Producer prices in the Euro Area declined by 7.6% YoY in July, in line with market estimates, and accelerating from the 3.4% decrease in the previous month. It marked the third consecutive decline in producer prices at the steepest pace since 2009, largely due to the 24.2% YoY drop and 16.4% MoM fall drop in energy prices.

The S&P Global/CIPS UK Services PMI was revised higher to 49.5 in August from a preliminary of 48.7, but still pointed to the first downturn in services activity since January, amid weaker business and consumer spending, combined with the impact of higher borrowing costs on client demand. Input price inflation was the joint-lowest since May 2021 while prices charged by service providers rose the least for two years.

President Vladimir Putin said Russia won’t rejoin a deal enabling Ukrainian grain to be shipped globally until the West meets its demands to facilitate Russian agricultural exports.

Domestic Economy

At 10 AM ET, July Factor Orders will be reported and are expected to fall 2.5%, reversing course from June’s 2.3% gain. Excluding Transportation, July orders are expected to be little changed compared to June.

Data from the China Passenger Car Association showed Tesla (TSLA) sold 84,159 China-made EVs in August, up 9.35 YoY.

Goldman Sachs (GS) now sees a 15% chance the U.S. will slide into recession, down from 20% previously as cooling inflation and a still-resilient labor market suggest the Federal Reserve may not need to raise interest rates any further. We’d note Goldman’s 15% probability is well below a 60% consensus figure tabulated by Bloomberg.

Late this evening, August total vehicle sales are expected to be released and investors in Ford (F), General Motors (GM), and Tesla as well as other auto companies and their suppliers will be sizing the figures up vs. the seasonally adjusted annual rate of 15.74 million reported for July.

Verisk estimates industry-insured losses to onshore property for Hurricane Idalia will range from $2.5 to $4 billion.

Markets

Equities started September mixed as traders expressed opinions about consumer weakness bidding down both the Consumer Staples (-0.85%) and Consumer Discretionary (-0.61%) sectors. Communications Services (-0.93%) also saw some pressure as Fox Corp (FOXA), Paramount Global (PARA), and Warner Brothers Discovery (WBD) traded down 6.29%, 9.54% and 12.02%, respectively. Highlights included Financials (0.90%), and Energy, which led with a 2.05% gain by the close. The Nasdaq Composite was flat, down a mere 0.02% while the S&P 500 gained 0.18%, the Dow added 0.33% and the Russell 2000 closed 1.11% higher. Hewlett Packard Enterprise (HPE) 5.83% after posting earnings that beat on both top- and bottom-line results.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 5.10%
• S&P 500: 17.61%
• Nasdaq Composite: 34.06%
• Russell 2000: 9.06%
• Bitcoin (BTC-USD): 55.59%
• Ether (ETH-USD): 13.04%

Stocks to Watch

Before U.S. equity markets begin trading today, America’s Car-Mart (CRMT) and Brady Corp. (BRC), will report their latest quarterly results.

Airbnb (ABNB) and Blackstone (BX) will join the S&P 500 prior to the start of trading on Monday, September 18. Airbnb is replacing Newell Brands (NWL), which will head to the SmallCap 600, and Blackstone will be replacing Lincoln National (LNC), also headed to the SmallCap 600.

Qualcomm (QCOM) shared it will supply chips to power in-car infotainment systems to luxury automakers Mercedes (MBGYY) and BMW (BMWYY). During an interview at the Munich auto show, Qualcomm CEO Cristiano Amon shared the company expects to have $4 billion in revenue from the automotive sector by 2026, rising to $9 billion by the end of the decade.

China's Country Garden (CTRYY) made interest payments on two U.S. dollar bonds just as a grace period was due to end on Tuesday, a person close to the company said, in a relief for the embattled developer and crisis-hit Chinese property sector.

Workers at Chevron's (CVX) Gorgon and Wheatstone liquefied natural gas (LNG) projects in Australia plan a total strike for two weeks starting September 14.

Nestlé (NSRGY) has divested Palforzia, its peanut allergy treatment business, to Stallergenes Greer, a biopharmaceutical company that specializes in the diagnosis and treatment of allergies.

Reports suggest private equity firm Thoma Bravo is in advanced discussions to acquire patient record software provider NextGen Healthcare (NXGN).

IPOs

In August, 16 companies filed for IPOs, including Arm (ARM), Instacart (ICART), and Klaviyo (KVYO). This week we have the following IPOs:

• Grocery operator Maison Solutions (MSS) is raising $12 million by offering 3 million shares that are expected to be priced at $4 per share.
• Forestry company Nature Wood Group Limited (NWGL) will offer 0.9 million shares with price talk landing in the range of $9-$11 per share.
• Online brokerage and investment advisory company Solowin Holdings (SWIN) will offer an expected 2.5 million shares, targeting $4 per share.
• E-sports event promotion and product marketing company Gamer Pakistan (GPAK) aims to raise $7.7 million via an offering of ~1.7 million shares.

Readers looking to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

AeroVironment (AVAV), Asana (ASAN), Gitlab (GTLB), and Zscaler (ZS) are slated to report quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Wednesday, September 6

• Germany: Factory Orders – July
• US: Weekly MBA Mortgage Applications
• US: S&P Global Final Services PMI – August
• US: ISM Non-Manufacturing Index – August
• US: Fed Beige Book

Thursday, September 7

• China: Imports/Exports – August
• Japan: Leading Economic Index (Preliminary) – July
• Germany: Industrial Production – July
• Eurozone: 3Q 2023 GDP – Third Estimate
• US: Weekly Initial & Continuing Jobless Claims
• US: Productivity and Unit Labor Cost – 2Q 2023
• US: Weekly EIA Natural Gas Inventories
• US: Weekly EIA Crude Oil Inventories

Friday, September 8

• Japan: 2Q 2023 GDP (Final)
• Germany: Inflation Rate, Consumer Price Index – August
• China: Inflation Rate, Producer Price Index - August
• US: Consumer Credit – July

Thought for the Day

“September days have the warmth of summer in their briefer hours but in their lengthening evenings a prophetic breath of autumn." -Rowland E. Robinson

Disclosures

• Zscaler (ZS) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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