Dow Jones & Nasdaq 100 Dip on Trump Uncertainty and Pre-Jobs Report Tension

Key Asian Market Movers: Nikkei Bucks Trend on BoJ Comments

A stronger USD/JPY lifted the Nikkei even as BoJ officials warned of tariff risks, setting the tone for a volatile week. A weaker Yen can boost overseas demand and improve the bottom line for export-focused companies.

BoJ Comments Add Uncertainty

Bank of Japan Deputy Governor Ryozo Himino spoke early in the Asian session, commenting on the potential effect of US tariffs. He reportedly stated:

“At the moment, the risk of a larger-than-expected impact may deserve greater attention. Overall, the global economy still faces high levels of uncertainty.”

Concerns about tariffs have pressured the Bank of Japan to keep interest rates at 0.5%. Deputy Governor Himino’s comments suggested that the BoJ needs more time to assess the effect of tariffs on external demand and the broader economy. Easing bets on a Q4 BoJ rate hike weighed on the Japanese Yen.

At the same time, Himino did not dismiss further monetary policy tightening, adding:

“If our baseline scenario is realized, it would be appropriate to continue raising interest rates in accordance with improvements in the economy and prices.”

Mainland China and Hong Kong Markets Slip

Mainland China and Hong Kong equity markets edged lower in morning trading after Monday’s gains. The Hang Seng Index fell 0.33% to 25,534, while the Mainland’s CSI 300 and the Shanghai Composite Index declined 0.32% and 0.53%, respectively.

Investors likely took profit after Monday’s rally. The Hang Seng Tech Index slid 1.46%, partially reversing the previous session’s 2.2% gain. Alibaba (9988) fell 0.8% after soaring 18.5% on Monday on impressive earnings.

Upcoming US labor market data could influence expectations of multiple Fed rate cuts, exposing rate-sensitive tech stocks to shifts in the Fed’s rate path.

Australia’s ASX also dropped, reflecting broader market caution ahead of crucial economic data releases.

US Futures Drop Ahead of Trump Announcement

Beyond Asia, US stock futures dropped in the morning session, tracking Asian markets lower. The US markets resume trading after the Labor Day weekend, with President Trump reportedly delivering an announcement from the Oval Office. Trump could discuss one of many topics, ranging from tariffs to policy to the Fed.

The Nasdaq 100 E-mini fell 41 points, the S&P 500 E-mini dropped 7 points, and the Dow Jones E-mini lost 41 points.

September is often a challenge for markets, with policy shifts and tariffs heightening volatility risks. The Kobeissi Letter remarked on September market trends, stating:

“Since 1927, in the year 1 of the US presidential cycle, the S&P 500 has fallen 58% of the time in September, the second-worst month historically. During these years, the index returned an average of -1.62%. Overall, September has averaged the worst since 1950. Since 1950, September has posted gains in just 3 out of 18 times in post-election year. History says volatility is ahead.”

Outlook: US Labor Market Data in Focus

Later today, the US ISM Manufacturing PMI will be in focus. Economists expect the PMI to rise from 48 in July to 49 in August. A move above the neutral 50 level could signal a resilient US economy, given that manufacturing contributes about 20% to the US GDP. Beyond the headline PMI, employment and price trends will require consideration.

Looking ahead, traders face a potential period of heightened market volatility. US JOLTs job openings, ADP employment change, initial jobless claims, the ISM Services PMI, and the Jobs Report will face scrutiny.

Moderate weakness could boost rate-cut bets and sentiment, but severe deterioration may spark stagflation fears and risk aversion, given that inflation trended higher in July. Gold climbed to a record high of $3,509 in morning trading, underscoring rising market risks.

Technical Levels to Watch

Despite the morning losses and caution, the broader short-term bias remains bullish. However, bullish momentum hinges on the upcoming Jobs Report (September 5). For traders, here are the key lines in the sand that could determine market direction this week.

Dow Jones

• Resistance: August 22 high of 45,841, 46,000, then 46,500.
• Support: 45,500, 45,000, and then the 50-day EMA (44,510).

Nasdaq 100

• Resistance: August 18 high of 23,882, 24,000, then 24,500.
• Support: The 50-day EMA (23,092), 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 (6,331).

With Fed speakers and jobs data ahead, traders face a pivotal 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.