(Bloomberg) — Global equities began September on the back foot as investors prepared for what’s typically considered the most challenging month for stocks.

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Europe’s Stoxx 600 fell 0.4% from Friday’s record high, with the automotive and consumer goods sectors particularly affected. This downturn followed data showing a fourth consecutive month of contraction in Chinese manufacturing activity, alongside a deepening slump in the country’s residential property market.

Similarly, mining giants such as Rio Tinto Plc and BHP Group Ltd. saw declines after iron ore prices dropped. In London, Rightmove Plc surged more than 20% after Rupert Murdoch’s REA Group Ltd. said it’s exploring a possible cash and share offer.

US equity futures softened after the S&P 500 came close to an all-time high on Friday. The dollar was steady, while cash Treasuries were closed for the US Labor Day holiday.

September has been a notably poor month for stocks over the past four years, while the dollar typically outperforms, according to data compiled by Bloomberg. Wall Street’s fear gauge – the Cboe Volatility Index, or VIX – has risen each September since 2021.

The trend may continue, especially with the upcoming US jobs report on Friday, serving as a guide to how quick, or slow, the Federal Reserve will cut rates and as the US election campaign gets into full swing. Traders are pricing the US easing cycle will begin this month, with a roughly one-in-four chance of a 50 basis-point cut, according to data compiled by Bloomberg.

“I think the market is pretty well versed with what it thinks is going to happen — there will be some kind of cut,” Fiona Boal, global head of equities at S&P Dow Jones Indices, told Bloomberg Television. “As we move through autumn, we will see the VIX move more to thinking about the markets, thinking about political issues.”

Two days before Friday’s report, the government will issue figures on July job vacancies. The number of open positions, a measure of labor demand, is seen easing to a three-month low of 8.1 million — just above a more than three-year low.

The equity-market rally may stall even if the Federal Reserve starts its rate-cutting cycle, according to JPMorgan Chase & Co. strategists.

Any policy easing would be in response to slowing growth, while the seasonal trend for September would be another impediment, the team led by Mislav Matejka wrote in a note.

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“We are not out of the woods yet,” Matejka said, reiterating his preference for defensive sectors against the backdrop of a pullback in bond yields. “Sentiment and positioning indicators look far from attractive, political and geopolitical uncertainty is elevated, and seasonals are more challenging.”

Elsewhere, German Chancellor Olaf Scholz’s ruling coalition was punished in two regional elections on Sunday, with the far right clinching its first triumph in a state ballot since World War II. Still, political parties moved to block the Alternative for Germany from power in the eastern states of Thuringia and Saxony.

China Woes

In Asian markets, multiple rounds of stimulus have failed to revive growth in China, where a prolonged property market slump is curbing domestic demand in the world’s second-largest economy.

“I think there’s a huge problem — by now everybody recognizes that,” Hao Ong, chief economist at Grow Investment Group, told Bloomberg’s David Ingles and Yvonne Man in an interview. “The government needs to do substantially more.”

In commodities, oil steadied as traders weigh a planned production increase from OPEC+ next month against currently lower output in Libya, while staying mindful of economic headwinds in China.

Key events this week:

• US markets closed for Labor Day holiday, Monday

• South Korea CPI, Tuesday

• Switzerland GDP, CPI, Tuesday

• South Africa GDP, Tuesday

• US construction spending, ISM Manufacturing index, Tuesday

• Mexico unemployment, Tuesday

• Brazil GDP, Tuesday

• Chile rate decision, Tuesday

• Australia GDP, Wednesday

• China Caixin services PMI, Wednesday

• Bloomberg CEO Forum in Jakarta, Wednesday

• Eurozone HCOB services PMI, PPI, Wednesday

• Poland rate decision, Wednesday

• Fed’s Beige Book, Wednesday

• Canada rate decision, Wednesday

• South Korea GDP, Thursday

• Malaysia rate decision, Thursday

• Philippines CPI, Thursday

• Taiwan CPI, Thursday

• Thailand CPI, Thursday

• Eurozone retail sales, Thursday

• Germany factory orders, Thursday

• US initial jobless claims, ADP employment, ISM services index, Thursday

• Eurozone GDP, Friday

• US nonfarm payrolls, Friday

• Canada unemployment, Friday

• Chile CPI, Friday

• Colombia CPI, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 6:47 a.m. New York time

• Nasdaq 100 futures fell 0.2%

• Futures on the Dow Jones Industrial Average fell 0.1%

• The Stoxx Europe 600 fell 0.4%

• The MSCI World Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.1063

• The British pound was little changed at $1.3133

• The Japanese yen fell 0.4% to 146.77 per dollar

Cryptocurrencies

• Bitcoin was little changed at $58,400.65

• Ether rose 0.8% to $2,521.39

Bonds

• The yield on 10-year Treasuries was little changed at 3.90%

• Germany’s 10-year yield advanced three basis points to 2.33%

• Britain’s 10-year yield advanced four basis points to 4.06%

Commodities

• West Texas Intermediate crude fell 0.1% to $73.44 a barrel

• Spot gold fell 0.2% to $2,499.19 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Catherine Bosley and Sagarika Jaisinghani.

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