Panic selling is due to US growth concerns and exodus from tech shares
Global stocks are bleeding on Monday amid the resurgent fears of a US recession. Friday’s weaker-than-expected jobs figures in the US sparked concerns about the health of the world’s largest economy. The data showed that US employers added just 114,000 jobs in July, far fewer than expected. The unemployment rate came in at a nearly three-year high of 4.3%, up from 4.1% last month. Against this backdrop, investors are now building bets on an emergency rate cut by the Fed.
In Asia, Japanese stocks saw their biggest single day sell-off since Black Monday crash of 1987. The Nikkei 225 gave up more than 13%, while the yen gained over 3% versus the US dollar since the start of the day, extending its ascent after adding more than 10% last month. Bucking the trend, the Bank of Japan raised interest rates last week. The decision came four months after the bank raised its key rate above zero for the first time in 17 years.
Following a massive sell-off in Asia, European equities plummeted at the start of the week. The regional Stoxx 600 index lost 2.6% since the beginning of the session, suffering solid losses for the third day in a row. Tech stocks led losses in the region amid the ongoing sell-off in US tech giants.
After a volatile and bloody week for Wall Street, US stock index futures fell early Monday, with the Nasdaq Composite extending losses to settle in correction territory. The tech-heavy index is now down more than 10% from an all-time high seen last month. The S&P 500 is 5.7% below its record high, while the Dow is off by nearly 4%. Adding to the selling pressure in the US market, Warren Buffett’s Berkshire Hathaway said that it had halved its position in Apple in the second quarter.
The US dollar keeps losing ground along with stocks as traders are spooked by a possible emergency rate cut of more than 0.25% amid the ongoing panic across the financial markets. The USD index dipped to five-month lows around 102.40 earlier on Monday, clinging to the lower end of the extended trading range during the European session. Despite oversold conditions and risk aversion, the greenback may see even deeper losses on Fed-related concerns. A failure to hold above 102.00 would pave the way towards fresh 2024 lows.
