Fears Of Slowing U.S. Economy Are Rocking Markets Across The Globe

A sell-off in global markets turned into a rout on Monday due to panic over a slowing American economy, with stocks falling across Asia and Europe. 

This sharp reversal in major markets, which have recently risen due to optimism about cooling inflation, solid labor markets, and the promise of artificial intelligence technology.

The Nikkei 225 index fell 12.4 percent

Japan saw huge drops due to economic concerns and fears about the impact of a stronger yen on company profits.

The Nikkei 225 index experienced a 12.4% drop, marking its largest one-day point decline since the 1987 Black Monday crash, while the Topix index, which includes companies representing Japan’s economy, fell 12.2%.

Unease spread to Europe, with the Pan-European Stoxx index falling over 2% in early trading, and major markets experiencing declines. 

Losses were expected to continue in the United States, with stock futures for the S&P 500 and Nasdaq falling over 4%.

Goldman Sachs has increased its expectations for the Federal Reserve to cut interest rates at its next three meetings, following a weak US jobs report that showed a significant slowdown in hiring and a rise in unemployment to its highest level in nearly three years. This has raised concerns about the global economy cooling and the Federal Reserve’s delay in interest rate cuts.

South Korea’s benchmark Kospi index plummeted by more than 10% at one point. Taiwan, Singapore, Australia, Hong Kong, and China’s mainland all had worse equity markets. One of Asia’s best-performing markets this year, India’s stock market, saw a decrease of more than 2 percent in trading.

Technology shares were hit particularly hard

The impact on technology shares was very severe. Samsung Electronics and Taiwan Semiconductor Manufacturing Company both lost 10% in Asia. European semiconductor manufacturers STMicroelectronics of Switzerland and ASML of the Netherlands also experienced a decline. The futures of New York-listed companies Nvidia and Intel were less promising.

The VIX, Wall Street’s “fear gauge,” reached its highest level since early 2020 during the coronavirus pandemic’s market meltdown. This surge reflects investor uncertainty over market direction.

Additionally, Bitcoin, the largest cryptocurrency, experienced a significant drop over 10%, indicating further investor anxiety.

The decline in Korean and Japanese stocks briefly triggered a “circuit breaker” mechanism, which stops trade to give markets time to process significant changes. However, even following those required pauses, the stock sell-off appeared to pick up speed. Fears spilt over into the debt market, causing trade in Japanese government bonds to stop as well.

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