Japanese Nikkei drops 2%; Asia-Pacific markets fall after S&P 500 closes at year’s low

China’s official manufacturing purchasing managers’ index surprisingly rose in September to 50.1, well above the 49.6 predicted by analysts in a Reuters poll.

The 50 point mark separates growth from contraction. PMI prints compare month-to-month activity.

Meanwhile, the Caixin/S&P Global Manufacturing Purchasing Managers’ Index, a private survey of factory activity — reported a contraction with a reading of 48.1.

“Subdued demand conditions and lower production requirements led companies to scale back buying activity in September, with the rate of decline being the fastest in four months,” Caixin’s press release said.

The official non-manufacturing PMI came in at 50.6 in September, down from 52.6 in August.

—Abigail Ng

China’s official manufacturing purchasing managers’ index for September is expected to fall below the 50 point mark separating growth from contraction, according to a Reuters poll of analysts.

Economists are expecting a reading of 49.6, slightly higher than August’s 49.4, which would mark the third consecutive month of contraction.

PMI readings are sequential and represent month-to-month expansion or contraction.

A private survey of Chinese factory activity is also scheduled for Friday, and analysts polled by Reuters expect the print to hit 49.5.

—Abigail Ng

The US Federal Reserve announced another 75 basis point hike earlier this month, pushing the federal funds rate to a range of 3% to 3.25%. The central bank has also signaled that it may raise interest rates to as high as 4.6% in 2023 to control inflation.

Ed Yardeni, the economist who coined the term “bond vigilantes,” gives his perspective as the Fed’s response to inflation comes under scrutiny.

Pro subscribers can learn more here.

— Zavier Ong

Cleveland Federal Reserve Chair Loretta Mester said interest rates are not yet restrictive and there is still a long way to go to reduce inflation.

“Inflation is still at its highest level in 40 years,” Mester told CNBC’s Steve Liesman during an appearance on “Squawk Box.” “So right now the conversation has to be we have to do, what we have to do to get back to price stability, because we can’t have a healthy economy, we can’t have good labor markets over time, unless we return to price stability.”

Mester said she was likely “a little above the midpoint” among Fed officials on raising interest rates, citing lingering inflation.

“We’re not even in restrictive funds rate territory yet, so you’re right, we’ve raised the funds rate by 300 basis points this year, but look how high inflation is,” he said. Master.

—Sarah Min