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ASX 200 futures were trading 94 points lower, reflecting a -1.17% decline as of 8:30 am AEST, suggesting a challenging session ahead. Several factors have contributed to this outlook, including significant losses in global markets and commodities.
Key Developments in Global Markets
Overnight, major US benchmarks experienced notable declines. The S&P 500 and Nasdaq recorded their worst sessions since early August. Notably, Nvidia Corporation (NVDA) saw its market capitalization drop by $280 billion, marking the largest one-day loss in market cap history, driven by ongoing concerns over China’s economic growth, which also weighed heavily on key commodities like copper and oil.
- Nvidia Corporation (NVDA): Dropped 9.5%, marking its most significant daily decline since April 2024.
- Oil: Fell by approximately 5% due to concerns over China’s demand, the potential restart of Libyan production, and expectations for OPEC+ to ease output cuts.
Broad Market Drivers
A broad range of factors is driving the market's downward momentum. These include concerns about China's growth, the US ISM manufacturing index remaining in contraction for August, and the negative seasonal trends typical of September. Additionally, the technology sector has shown particular weakness.
September Seasonality: A Historical Perspective
Historically, the second half of September has been one of the worst two-week trading periods of the year. Data from Goldman Sachs suggests that since 1990, the S&P 500’s performance from the Tuesday after Labour Day through the end of the month has averaged a decline of 1.0%. Over the last five years, September has seen an average drop of 4.2% for the S&P 500, with similar trends observed in previous presidential cycles.
During these periods, sectors such as Real Estate and Technology have typically underperformed, while defensive sectors like Staples, Healthcare, and Utilities have tended to hold up better.
ASX Performance in September
The ASX 200 has also had a challenging history in September. Since 2014, the ASX 200 (total return) has only recorded gains in September during 2019 (+1.8%) and 2016 (+0.5%), with an average decline of 2.2% over the month. The last four Septembers have been particularly poor, with declines of -2.8% in 2023, -6.2% in 2022, -1.9% in 2021, and -3.7% in 2020.
Market Focus for Today
Expect significant selloffs in the Resources and Technology sectors, while defensive sectors such as Staples, Real Estate, and Utilities might show relative strength. Resource-related ETFs experienced sharp declines overnight, with notable losses in Copper Miners (-7.5%), Uranium (-6.4%), Rare Earths/Strategic Metals (-4.6%), and Gold Miners (-3.5%). This could lead to a considerable gap down for local miners and energy stocks.
Additionally, Megaport Limited (ASX:MP1) saw a substantial stake reduction by an institutional shareholder, with $60 million worth of stock sold at a 4.5% discount to the last traded price. Meanwhile, the Queensland Government has confirmed discussions to provide support to The Star Entertainment Group (ASX:SGR).
This sets the stage for a potentially turbulent trading session as markets react to these global and local developments.
