Major US averages fall for the month, Asian markets set to open lower

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  • US stocks extended losses for the fourth straight trading day as fear of recession continued to weigh. Cleveland Federal Reserve Chair Loretta Mester sees the federal funds rate to top 4% in the coming months.

  • The Dow Jones fell 0.88%, the S&P 500 0.78% and the Nasdaq 0.56%. All three averages ended August with a loss of more than 4%. 10 of 11 S&P 500 sectors closed in the red, with Materials and Consumer Discretionary stocks leading the losses. The communication services sector was the only sector to end slightly higher, up 0.01%, with Snap shares jumping 8% after the company announced the cut of 20% of employees, which boosted shares of other social media, with Meta Platforms up 3.67% and Pinterest jumping. 5%.
  • Asian markets are expected to open lower, driven by the global sentiment of risk aversion. S&P/ASX futures fell 1.04%, Nikkei 225 futures slid 0.92%, Hang Seng index futures fell 0.42%. The S&P NZ 50 index slid 0.1% at the open.
  • Shares of BYD (HK:01211) fell 7% on news that Warren Buffett’s Berkshire Hathaway will sell 1.33 million shares worth $47 million, reducing its holdings from 20.04% to 19.92%.
  • China’s manufacturing PMI contracted for the second consecutive month in August. In fact, the data has contracted for 4 months in the last 5 months since March.
  • Crude oil futures fell further despite a bigger than expected drop in inventory data as OPEC+ production cut expectations faded on a surge in demand for 2022. The organization will meet Sept. 5 to discuss future production plans. On the other hand, President Biden is engaging in the Iranian nuclear negotiation, which could reduce Iran’s supply by one million barrels per day. Base metals and precious metals also slipped for the second trading day due to a strong US dollar, rising bond yields and recession concerns.
  • The Eurodollar has strengthened further on the ECB’s hint of a 75 basis point rate hike in September. Eurozone CPI rose to 9.1%, while core CPI rose to 4.3% in August from 8.9% and 4.0% in July. EUR/USD rose for the third trading day at 1.0050 this morning, heading towards a key resistance level of 1.01.
  • Commodity currencies continued to weaken against the US dollar due to weak Chinese manufacturing PMI and lower commodity prices.

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