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Daily Scan: Nikkei hits seven-month low; World markets cut risk ahead of jobs report

By NexChange
Capital Markets

Updated throughout the day

September 4

Good evening everyone. Risk was definitely off today as the world’s markets seem to be waiting with baiting breath for tonight’s non-farm payrolls report. A good reading here might seal the deal on a rate hike this month, while a bad one would surely push it off to a later date. The selling during the lower half of the session however seemed a little panicky, which could be attributed to Hong Kong’s terrible PMI reading earlier in the day but with the Nikkei hitting seven-month low, it might be something else altogether. Anyway, here’s how the major Asia-Pacific markets fared this week:

Day
Week

Nikkei 225
-2.2%
-7%

Hang Seng Index
-0.7%
-4.7%

ASX
+0.3%
-4.2%

The Chinese markets were closed Thursday and Friday; the Shanghai Composite lopped off 2.2% in its shortened week. European markets aren’t doing too well, despite Mario Draghi’s assurance that he’ll expand stimulus “if warranted.” The FTSE 100 retraced gains to fall 1.63%, the DAX – exacerbated by Germany’s surprise drop in factory order – slid 1.75%, while the CAC slumped 1.83%.

Here’s what else you need to know:

Hong Kong PMI falls to six-year low. Weak demand, lower output, as well as one the largest and fastest workforce declines since 2003 led the Nikkei Hong Kong Purchasing Managers’ Index to fall to 44.4 in August. That's well below its 48.2  reading in July and its worst showing since February 2009. Markit

Japanese wages miss estimates – badly. Japan’s manufacturing industry may be growing at a fast clip, but its labor market is continuing to disappoint. Labor cash earnings for the land of the rising sun grew just 0.6% in July, far below an estimated climb of 2% and even more worrisome if you adjust for inflation. It is. however, the first real wage rise the nation has experienced since 2012. Silver linings, man. Financial Times (paywall)

China swaps Australian mining for the country’s agriculture. After plunking ungodly amounts of money into the nation’s mining industry, China is now investing in Australian agriculture. Not only is China the No. 1  buyer of meats, wheats, and various other treats, it is now Australia’s largest investor in the agricultural sector, plowing as much as $450 million into the industry in 2014 alone. Wall Street Journal

ECB ready to expand stimulus. European Central Bank President Mario Draghi says the bank is projecting slower than expected economic growth in the eurozone, and the ECB will “act if warranted.” Wall Street Journal (paywall)

Debris found confirmed to be from missing MH370 flight. French investigators say they are certain that a piece of an airplane wing that washed up on a remote Indian Ocean island came from Malaysia Airlines Flight 370, which disappeared in March 2014 with 239 people on board. The New York

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