Stock Market Update

The S&P 500 futures currently trade 34 points below fair value.

Asian markets finished sharply lower on Thursday, extending Wednesday's risk-off tone as the Fed's hawkish message added to pressure from elevated oil prices and Treasury yields. Japan's Nikkei 225 fell 1.4% for a second consecutive decline, with Taiyo Yuden (-4%), SoftBank Group (-4%), and Mitsubishi UFJ (-3%) among the notable laggards, while investors also weighed the prospect of further BOJ tightening. China's Shanghai Composite dropped 0.8% to a more than two-month low in its return from the National Day holiday, while the Shenzhen Component tumbled 2.1%, with Foxconn Industrial Internet (-4%), Zhongji Innolight (-3%), China Life Insurance (-2%), and CATL (-2%) among the leading decliners. Attention in China now turns to next week's inflation and trade data following Beijing's recently announced stimulus measures. Hong Kong's Hang Seng Index fell 1.4%, with Lenovo (-8%), SMIC (-7%), Kingboard Laminates (-6%), Genscript Biotech (-5%), and Tencent (-2%) leading the selloff as September private-sector PMI slipped to 49.2 from 49.5, marking a second consecutive month of contraction. Elsewhere, Australian inflation expectations increased to 5.3% in October from 4.9%, while Japan's August current account surplus exceeded expectations.

• In economic data:
  • Japan's August current account surplus totaled JPY4.062 trln (expected JPY3.194 trln; prior JPY2.989 trln), while the adjusted surplus reached JPY2.98 trln (expected JPY2.14 trln; prior JPY2.52 trln).
  • Japan's September Economy Watchers Current Index increased to 47.0 (expected 46.7; prior 46.4).
  • Hong Kong's September S&P Global PMI slipped to 49.2 from 49.5, marking a second consecutive month of contraction.
  • Australia's October MI Inflation Expectations increased to 5.3% from 4.9%.
  • South Korea's August current account surplus widened to $46.11 bln from $42.08 bln.

European markets extend their losses, with rising oil prices and a renewed bond selloff adding to inflation and interest-rate concerns following hawkish Fed minutes. Germany's DAX falls 1.0% to its lowest level since July, with Infineon (-3%) and Deutsche Bank (-2%) among the laggards, while exports declined 0.8% m/m in August amid continued weakness in external demand. France's CAC 40 loses 0.9% to its lowest level since March, with BNP Paribas (-2%), Société Générale (-3%), Airbus (-2%), and Safran (-2%) retreating as fiscal concerns compound the broader risk-off tone. London's FTSE 100 declines 0.4% to its lowest level since June, although Tesco (+3%) outperforms after raising its full-year guidance and increasing its share buyback following a 6% increase in first-half adjusted operating profit. Middle East tensions remain in focus amid reports that the White House requested options for potential strikes on Iran, helping lift Brent crude to a two-week high and adding to pressure on global bond markets. The broader STOXX Europe 600 falls 1.0%, while Italy's FTSE MIB (-1.4%) and Spain's IBEX 35 (-1.2%) also trade firmly lower.

• In economic data:
  • Germany's August trade surplus narrowed to EUR19.5 bln (expected EUR19.0 bln; prior EUR21.6 bln).
  • Germany's August exports decreased 0.8% m/m (expected 0.8%; prior -0.5%).
  • Germany's August imports increased 0.9% m/m (expected 2.8%; prior -5.5%).
  • Germany's September car registrations increased 9.0% yr/yr (prior 2.6%).