Asian markets hit three-week low amid U.S. economic concerns

Asian stocks fell to three-week lows on Monday, with Japan at the forefront of the declines, following U.S. jobs data that intensified fears the Federal Reserve may have delayed interest rate cuts for too long.

The Japanese Nikkei 225 index dropped to a one-month low as recent gains in the yen hurt the profit forecasts for export firms, amid an economy growing slower than anticipated.

Stocks in Australia and South Korea also posted losses, driving the Asia-Pacific stock index to its lowest mark since August 16. The yen, which had previously risen due to the Bank of Japan's interest rate hike in July and expectations of Fed rate cuts, traded below 143 yen against the dollar.

Concerns over slowing U.S. economy

The apparent slowdown in the U.S. economy—which could extend to export-dependent nations in Asia—is heightening regional concerns. The U.S. labor market seems to be losing momentum, while the Chinese economy remains mired in recession. Additionally, enthusiasm for semiconductor firms such as Nvidia has waned, introducing further challenges.

Hebe Chen, an analyst at IG Markets, told Bloomberg, "Asian stock markets, particularly in tech-heavy regions like Japan, Taiwan, and South Korea, are preparing for a storm, given their particular vulnerability to the accelerating global slowdown. If the gloom of the struggling U.S. economy spreads globally, risk-sensitive currencies, such as the Australian dollar, may soon face substantial pressure."

Wall Street sell-off

Disappointing U.S. jobs data led to a broad sell-off on Wall Street last Friday. U.S. two-year Treasury bonds, which are highly sensitive to changes in monetary policy, lost some of Friday's gains, while the dollar edged up slightly on Monday. Australian and New Zealand bonds followed a similar trend to their American counterparts.

In other parts of Asia, attention is on Chinese assets as authorities work to improve market sentiment by easing foreign ownership restrictions in the manufacturing and healthcare sectors. Shares of Seven & i Holdings are being closely monitored due to rumors of a potential acquisition offer from Alimentation Couche-Tard.

In other primary commodity markets, iron ore prices dipped below $90 per ton for the first time since late 2022, while oil prices rebounded from their lowest levels since 2021.

September is turning out to be a tumultuous month for markets, with global stocks and key commodities falling amid concerns about slowing global growth. Anxiety is expected to rise, particularly with the upcoming release of Chinese inflation data and producer prices, which highlight the economic challenges facing policymakers.