Markets open in red as weak US output data trigger global sell-off

MUMBAI: Indian markets opened sharply lower on Wednesday, September 4, following a massive global sell-off triggered by weak manufacturing data from the US, which reignited fears of a potential recession in the American economy.

By 11:00 AM, the BSE Sensex had dropped 416 points, or 0.51 per cent, to 82,138, while the Nifty 50 was down 155 points, or 0.61 per cent, to 25,124.

The broader indices also started the day in the red.

The Bank Nifty index opened 230 points lower, or 0.44 per cent, at 51,459.45.

Only four stocks in the Nifty 50 were trading in positive territory.

Defence shares up

As anticipated, shares of key defence companies gained following the Defence Acquisition Council’s (DAC) approval of major procurement proposals worth Rs 1,44,716 crore for the Indian Armed Forces.

Mazagon Dock and Garden Reach Shipbuilders (GRSE) saw their stocks rise by over 6% and 4%, respectively, while Hindustan Aeronautics Limited (HAL) and Bharat Dynamics shares were up by 1%. Mishra Dhatu Nigam and Bharat Electronics Limited (BEL) also traded in the green.

ECO Mobility debuted on the National Stock Exchange at Rs 390, reflecting a 16.7% premium to its issue price. The company had set the IPO price band between Rs 318 and Rs 334 per equity share.

Wall Street down

Overnight, Wall Street closed sharply lower as investors tempered their optimism about artificial intelligence. The Dow Jones Industrial Average fell 1.51 per cent to end at 40,936.93; the S&P 500 lost 2.12 per cent to close at 5,528.93; while the Nasdaq Composite dropped 3.26 per cent to close at 17,136.30.

This negative sentiment carried over to Asia, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 0.44 per cent in early trade, and US stock futures extending their decline. S&P 500 futures were down 0.1 per cent, while Nasdaq futures eased 0.15 per cent.

Asia-Pacific markets

Markets across the Asia-Pacific region also declined on Wednesday, with Japan’s Nikkei 225 leading the losses, sliding more than 3 per cent. The Topix index was down 2.74 per cent.

South Korea’s Kospi shed 2.61 per cent at the open, while the small-cap Kosdaq dropped 2.94 per cent.

Australia’s S&P/ASX 200 fell 1.46 per cent, and Hong Kong’s Hang Seng index futures were at 17,487, lower than the HSI’s last close of 17,651.49.

Oil slips

Oil prices hovered near their lowest levels in months amid signs of a deal to resolve a dispute that had halted Libyan crude production and exports. Brent crude futures were last down 0.05% at $73.71 a barrel, while US crude futures dipped 0.13 per cent to $70.25 per barrel.

A series of US economic data is expected throughout the week, including job openings, jobless claims, and the closely watched nonfarm payrolls report due on Friday.

The Federal Reserve’s decision on whether to implement a regular or super-sized rate cut this month could hinge on Friday’s data, given the central bank’s focus on the health of the US labor market.

Currencies and gold

Safe-haven currencies like the dollar and yen strengthened on safety bids, with the Japanese yen last trading slightly higher at 145.36 per dollar.

Elsewhere, spot gold rose 0.05 per cent to $2,494.23 an ounce.