Nervous Nellies
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Why did US equity markets plunge sharply on the first trading day after Labor Day?
The US is back at work and somewhat nervous, it seems. So what's changed? We've had the manufacturing ISM, and there was some stuff in that that perhaps casts doubt on the route for inflation and employment, but the situation got so out of hand that there was pricing during the overnight session for an emergency rate cut from the Fed. That's subsided now, but shares are well down, defensive currencies are doing well, and bond yields are lower. So what is going on? It's Wednesdays, the 4th of September. September twenty twenty four, it's the morning call from Nab. Good morning. Well, the US is back from their holidays and selling shares, it seems. We've got a three point three percent fall in the Nasdaq at close.
The Dow is one and a half percent lower, two point one percent off the S P. The Russell two thousand down three point one percent as well. IT shares are down four point four percent. There's been lots of selling in Europe as well. The Eurostox fifty closed down one point two percent percent, the uh DAX one percent lower, the FTSE one hundred is off by nort eight percent. And bond yields lower. Well, the money's got to go somewhere. Five basis points off ten year treasuries, six off ten years in Germany and the UK. Aussie ten year yields were down one basis point yesterday to four percent. Now on futures, that looks more like three point nine six percent. We've got a naught point one percent rise in the US dollar on the DXY index.
It was up a bit more than that earlier, but the Aussie really taking a hit. It's down one point one percent today to sixty seven point two US cents. The Euro and the pound, both down naught point three percent, but a naught point eight percent rise in the yen today against that rising US dollar and big falls in oil as well. A four point four percent drop in the price of WTI. Brent is down four point nine percent, down to seventy three seventy a barrel. Some of that is driven by hopes that all that political friction in Libya will be resolved and they'll turn back on the full production of oil there.
How are safe‑haven currencies and bond yields reacting to the market sell‑off?
But there's clearly Nervousness around demand as well. So we've got big moves just about everywhere. Uh let's see what Nabs Gavin Friend makes over out of Oli joins us from uh London. So big falls in equities. So is this just a blip or is it something more fundamental? Because I noticed the VIX index is back up over uh nineteen point four. So this is the highest that's been since the thirteenth of August. August.
Yeah, morning Phil. I mean, as you say, a day after the US Labour Day holiday and uh and so markets is the first trading day of September uh for the US. Historically not a good month for stocks. Um and it is, to your point, you know, a seer red out there. Yeah, I think this is the worst start to September quite some time though, it's fair to say. Yeah, I mean historically um Sept over the last five years US stocks uh the SP at Least has been down just over four percent. Um February doesn't tend to be a good month, but certainly September does stand out. All that said, it is very early days to be writing the month off. Uh a couple of observations, I think. The fact that uh you you make the point of that NVIDIA is again under pressure, pulling the chip sector and other AI related tech stocks.
Is it? I didn't mention the videos I didn't mention Nvidia specifically.
specifically, but yes, I mean they are down nine point five percent today. So there is that big question mark still, isn't there, about whether AI has been overplayed.
Yes, it takes us back to last week's uh NVIDIA earnings report that didn't match elevated expectations and the associated questions that investors have been asking recently about the sort of state sustainability of the heavy investment into the AI sector um after a good run, uh Intel down over seven percent. We must remember, while tech shares have been rolling over for a while the uh the Dow hit uh a fresh all time high on Friday, only on Friday. Um
Is the recent weakness in Nvidia and AI‑related tech stocks driving broader market nerves?
The S P almost matching its July all time high. Um so looking you know look at markets sort of more broadly on the day, you know, we have, as you mentioned, lower equities, lower bond yields, a higher dollar, an even higher Japanese yen and a Swiss franc that's also rising a little bit against a generally firm
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Chapters
8 chapters
1
Why did US equity markets plunge sharply on the first trading day after Labor Day?
0:01–1:45
2
How are safe‑haven currencies and bond yields reacting to the market sell‑off?
1:45–3:35
3
Is the recent weakness in Nvidia and AI‑related tech stocks driving broader market nerves?
3:35–5:51
4
What impact will the upcoming US non‑farm payrolls and JOLTS data have on market sentiment?
5:51–8:34
5
How are European political developments influencing risk‑off trading and safe‑haven demand?
8:34–10:27
6
What do the latest Australian GDP partials and current‑account figures reveal about the economy?
10:27–12:36
7
How is the Reserve Bank of Australia positioning policy amid slowing inflation and weak growth?
12:36–14:13
8
Will the Bank of Canada’s expected rate cut and upcoming US trade data calm global nerves?
14:13–15:22