5 things to start your day: Europe

Good morning. Asian stocks follow US peers lower. Oil's price slump deepens. And global companies rush to sell debt. Here's what people are

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Good morning. Asian stocks follow US peers lower. Oil's price slump deepens. And global companies rush to sell debt. Here's what people are talking about.

Asian equities tumble

Stocks in Asia slumped the most since the Aug. 5 rout, tracking a selloff in US peers driven by a plunge in Nvidia. Shares of Asian chipmakers tumbled amid renewed concerns over the artificial intelligence frenzy, bringing a regional equity benchmark down more than 2%. Chip giants Taiwan Semiconductor Manufacturing and SK Hynix fell at least 4% each. US equity futures also slid in Asian trading after the S&P 500 shed more than 2%. The broad risk-off mood came as a closely watched US manufacturing gauge again missed forecasts, shifting investor focus toward the odds of an economic slowdown in the world's largest economy. That added to an already-weak sentiment in Asia, where a run of disappointing Chinese data has been hurting risk assets.

Nvidia wipeout

Nvidia shares tumbled 9.5%, wiping out $278.9 billion in the biggest loss of value ever for a US stock. It is now down 14% in the three sessions since it reported earnings that failed to impress investors who had become used to the company beating forecasts handily. All 30 members of the Philadelphia Semiconductor Index sank at least 5.4%, with On Semiconductor, KLA and Monolithic Power Systems down more than 9%. The Nasdaq 100 sank almost 3.2%. Nvidia shares lost another 2% in late trading after the US Justice Department sent subpoenas to it and other companies as it seeks evidence that the chipmaker violated antitrust laws. Investors are increasingly fretting that AI's promise to rewire global economies is far from being realized, making it hard to justify lofty valuations.

Bleak outlook

Crude oil pushed lower after a loss of almost 5% on Tuesday as the possible easing of political unrest in Libya shifted focus back to OPEC+'s plan to boost production, while demand concerns persist. West Texas Intermediate fell below $70 a barrel for the first time since early January, with Brent also lower. A Libyan central banker said a deal appeared imminent to resolve a dispute between the rival governments in the strife-torn North African nation, which could spur the resumption of oil output. Across the commodities complex, iron ore is trading below $100 a ton, as China's steel market shows few signs of a revival, while gold is nearing $2,500 an ounce. For more on oil, read Sungwoo's analysis below.

Commerzbank sale

The German government plans to cut its stake in Commerzbank as it seizes on a recent share rally to initiate an exit from the lender it rescued over a decade ago. The country's finance agency, which manages the stake of about 16.5%, announced the move after market close on Tuesday. It didn't disclose how much it would sell or when. The government stake is worth roughly €2.5 billion. Like other European lenders, Commerzbank has reaped the gains from the European Central Bank's series of interest rate hikes which began in 2022. The share price is up around 20% this year, having hit the highest level in more than a decade in May. The state doesn't intend to sell its entire holding for now, according to people familiar with the matter.

Debt deluge

Companies globally are piling into debt markets to sell bonds and loans. Ford Motor Credit, Formula 1, Brazil's Petrobras and Saudi Arabia's sovereign wealth fund were just a handful of the issuers tapping debt markets Tuesday, capitalizing on cheap funding costs ahead of potential spikes in yields in the coming months tied to the US presidential election. Nearly 30 blue-chip companies sold about $43 billion of bonds in the US market Tuesday, the busiest single sales day by number of issuers, according to data compiled by Bloomberg. In Europe, 24 companies and government-tied issuers raised €22.6 billion from debt markets, adding to Monday's €11.5 billion-plus issuance. The deluge comes as corporate finance chiefs are eager to lock in more favorable borrowing costs.

Coming up

On today's economic calendar we expect composite PMIs from France, Germany, the euro zone and the UK. The ECB's Villeroy will be speaking and, later in the day, we will get the US trade balance and JOLTS job openings.

What we've been reading

This is what's caught our eye over the past 24 hours. ECB's Nagel sees euro-area inflation on right track, FAZ says Galderma owners lead $1.3 billion rush of Europe share sales China targets EU dairy just as its own milk industry flounders Swiss regulator's new head seeks power to curb bank growth Labour's non-dom crackdown could cost UK £1 billion a year Goldman sees US GDP hit from Trump win, boost if Democrats sweep

And finally, here's what Sungwoo is interested in this morning:

September is already proving to be a challenging month for oil, with WTI crude breaking below the big round number of $70 a barrel. More rough days are likely with price risks tilted to further downside. Brent is also not far from the level, hovering near $73. The global benchmark for crude slid to the lowest level of the year, erasing all its 2024 gains. The overall picture was already bearish on concern over worsening demand in China, the biggest crude buyer, while a return of OPEC+ supplies is looming later this year. More recently, signs of a possible easing of political unrest in Libya hurt sentiment further. The latest economic data out of China has underwhelmed again and again. Moreover, the broader state of global manufacturing deteriorated further, with the JPMorgan Global Manufacturing PMI index sliding before 50 for a second month in August. Thus, the stakes are high as all eyes focus on OPEC+'s next move. Indications are that the group is leaning toward reviving production as planned in October. The alliance has said previously it could pause or reverse hikes if necessary. Even if the group cancels scheduled output hikes, inventories will accumulate next year amid booming supplies from the US and elsewhere, according to the the International Energy Agency last month. Taken together, all this seems to suggest oil traders will be on edge while the commodity will likely struggle to reverse the current downtrend in a sustained manner. Sungwoo Park is an editor on the Asia Markets Live team based in Singapore.

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