Dow Jones & Nasdaq 100 Could Breakout Despite China Margin Fears and Trump Chatter

Key Asian Market Movers: China Services PMI Hits Sentiment

The Chinese economy faced scrutiny as private sector PMI data revealed intensifying competition and rising margin pressures. Firms reduced staffing levels to manage costs, raising concerns about domestic consumption and Beijing achieving its 5% GDP growth target.

The RatingDog China General Services PMI increased from 52.6 in July to 53 in August on new orders rising at the fastest pace since May 2024. Today’s data followed Monday’s RatingDog China General Manufacturing PMI, which rose to 50.5 in August (July: 49.5).

Despite the higher headline PMIs, inflation and employment trends weighed on risk assets.

Mainland China and Hong Kong Markets See Red

The Hang Seng Index fell from a session high of 25,790 to a low of 25,404 in morning trading on Wednesday, September 3. At the time of writing, the Hang Seng Index was down 0.22% at 25,439. Meanwhile, the Mainland’s CSI 300 and the Shanghai Composite Index dropped 0.33% and 0.62%, respectively.

Elsewhere, the Nikkei 225 declined 0.29% to 42,187 despite a weaker Japanese Yen, while the ASX 200 slid 1.18%. USD/JPY rose 0.36% to 148.889. Typically, a weaker Yen may offset the effect of US tariffs on demand for Japanese goods, potentially boosting corporate earnings and share prices.

The PMI numbers from China coincided with the highly anticipated China Summit.

China Summit Draws Criticism from President Trump

Beyond the data, President Trump put the spotlight on the China Summit. The US President posted on X (formerly Twitter):

“Please give my warmest regards to Vladimir Putin and Kim Jong Un, as you conspire against the United States of America.”

Trump’s post was in response to updates from this week’s China Summit. India and Russia were among attendees, where Beijing aimed to forge stronger ties with nations impacted by US policy.

Given the US President’s stance against perceived anti-US policies, China and India could face renewed trade tensions with the US. Rising tensions and concerns about Trump’s unpredictability affected demand for risk assets in morning trading.

US Futures Post Mixed Results Ahead of Key Labor Market Data

Beyond Asia, US stock futures posted mixed performances in the morning session on Wednesday, September 3. The Nasdaq 100 E-mini gained 53 points, the S&P 500 E-mini rose 6 points, while the Dow Jones E-mini dropped 120 points.

The mixed start to the day reflected investor caution ahead of crucial US labor market data. Economists expect the Fed to cut rates in September. However, uncertainty remains about the Fed’s policy stance in the fourth quarter. This week’s Jobs Report could dictate whether the Fed cuts rates multiple times or hits the pause button.

Outlook: US JOLTs Job Openings in Focus

Later today, JOLTs job openings, a prelude to Friday’s Jobs Report, will be in the spotlight. Economists forecast job openings to fall from 7.437 million in June to 7.4 million in July. A sharper decline in job openings could signal a cooling labor market and lift expectations of multiple Fed rate cuts. A more dovish Fed rate path could boost demand for risk assets.

On the other hand, a higher reading could temper bets on more rate cuts in Q4, potentially weighing on sentiment.

Looking ahead, volatility could build in the coming sessions. US ADP employment change, initial jobless claims, the ISM Services PMI, and the Jobs Report will also influence risk appetite.

Moderate weakness in the labor market and the services sector could boost rate-cut bets and sentiment. However, severe deterioration may revive stagflation fears and risk aversion, given that inflation trended higher in July.

Gold climbed to a new record high of $3,547 in morning trading, underscoring rising concerns about the US economy.

Market commentator Oguz O., with over 92k followers, shared comments from leading hedge fund manager Ray Dalio, stating:

“He warned, something worse than a recession is coming. It’s already happening. Gold prices are soaring while the USD index is collapsing.”

Technical Levels to Watch

Despite the mixed morning session and investor caution, the broader short-term bias remains bullish. However, bullish momentum hinges on Friday’s upcoming Jobs Report. For traders, here are the key levels that could determine market direction this week.

Dow Jones

• Resistance: August 22 high of 45,841, 46,000, then 46,500.
• Support: 45,000, then the 50-day EMA (44,530).

Nasdaq 100

• Resistance: August 18 high of 23,882, 24,000, then 24,500.
• Support: The 50-day EMA (23,096), and then 23,000.

S&P 500

• Resistance: August 28 high of 6,523 and then 6,750.
• Support: 6,400, the August 20 low of 6,363, and then the 50-day EMA (6,334).

With key jobs data ahead, traders face a crucial week that could decide whether September lives up to its reputation as the market’s toughest month. Follow our live coverage and consult our economic calendar.