Global stocks slump as dollar hits five-week low and gold climbs

Global stocks slumped Monday as Asia and Europe saw scattered losses, the dollar dropped to a five-week low, the euro retreated, and gold climbed to levels not seen since April.

In Asia, traders reacted to the mixed batch of factory data from China. A private gauge of manufacturing activity (the RatingDog index) came in at 50.5 for August, barely signaling growth.

That was a slight improvement from July’s 49.5. But the government’s own official PMI, released a day earlier, stayed stuck under 50 at 49.4, up marginally from the previous 49.3. Both readings showed China’s factory sector is far from recovering in full.

At the Shanghai Cooperation Organization’s two-day security summit, Chinese President Xi Jinping urged member nations to “strengthen cooperation in artificial intelligence.” Speaking at the opening session, Xi said the group should reject what he described as a “Cold War mentality.”

Hang Seng rallies, but Japan and Korea slide

The Hang Seng index in Hong Kong closed 2.17% higher at 25,617.42, led by a strong showing from Alibaba Group, which jumped 18.58%. CSPC Pharmaceutical Group surged 9.53% and WuXi Biologics rose 8.37%. On the mainland, the CSI 300 gained 0.6% and ended the session at 4,523.71, despite volatile trade.

Japan’s Nikkei 225 slid 1.24% to 42,188.79, weighed down by semiconductor losses. Advantest lost 7.92%, Disco Corporation dropped 7.71%, and Socionext fell 6.32%. The broader Topix also declined 0.39%, finishing at 3,063.19.

Over in South Korea, the Kospi lost 1.35%, ending at 3,142.93, while the Kosdaq slipped 1.49% to 785. Australia wasn’t spared either. The S&P/ASX 200 dropped 0.51%, closing at 8,927.70. Only India bucked the trend. The Nifty 50 gained 0.66% and the BSE Sensex climbed 0.6% as of early afternoon.

Trump tariffs overturned as European indexes hold steady

In the U.S., Trump took a legal hit on Friday after a Federal Appeals Court ruled that his 2023 “reciprocal tariffs” breached presidential authority. The court declared the sweeping levies on imports from dozens of nations unlawful.

Wall Street had ended last week in the red. The S&P 500 fell 0.64% to 6,460.26 but still locked in its fourth straight monthly gain. The Nasdaq Composite dropped 1.15% to 21,455.55, and the Dow Jones gave up 92.02 points to close at 45,544.88.

All three indexes responded to new inflation readings that showed price pressures remain stubborn. U.S. markets stayed closed Monday for Labor Day.

In Europe, stocks stayed mostly flat. Spain’s IBEX 35 slipped 0.25% to 14,898.5. The UK’s FTSE 100 added 0.27%, finishing at 9,212.53. Germany’s DAX rose 0.53% to 24,028.09, France’s CAC 40 added 0.44% to 7,737.67, and the STOXX600 ended up 0.39% at 552.31.

Currency markets saw the dollar continue its slide. The ICE U.S. Dollar Index dropped to 97.618, losing 0.16% on the day and notching a 2.2% monthly fall. The euro traded at 1.172, up 0.334%, while the pound sterling gained 0.18% to hit 1.353.

The euro/yen moved to 172.4, and the euro/sterling pair reached 0.866. The dollar/yen cross stayed flat at 147.00 after August’s 2.5% drop.

Meanwhile, the yuan held steady near a 10-month high at 7.1326 per dollar. Central bank support and a strong stock market inside China helped stabilize the currency, even though the wider economy is still wobbling. The People’s Bank of China continued setting firm daily fixings, giving investors a signal that it won’t let the yuan slide further for now.

In metals, gold rallied hard. Spot prices hit $3,486.86 per ounce, rising 1.2% as of 0641 GMT. Futures for December delivery moved up 1.1% to $3,554.60. The gains came as traders placed bigger bets on a Fed rate cut this month. Silver broke $40 for the first time since 2011, hitting $40.56. Platinum jumped 1.5% to $1,384.68. Palladium gained 0.8%, reaching $1,118.06.

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