Asian Markets Have A Horrible Monday, US Markets Set For Fall

Photo by Prexel via Flickr

Japan had a record-setting decline in their benchmark index, Asian markets are shaken, and all eyes are on the US markets for what comes next.

New York Times:

The moves were a sharp reversal in major stock markets, which for much of the past year have risen to new heights, propelled by optimism about cooling inflation, solid labor markets and the promise of artificial intelligence technology. As stocks tumbled across Asia, Europe and the Americas, few sectors spared as investors cashed out and sought refuge from the broad-based slump.

The declines were especially pronounced in Japan. The Nikkei 225 index dropped 12.4 percent, as economic fears added to concerns about a strengthening yen’s effects on corporate profits. It was the benchmark index’s biggest one-day point decline, larger than the plunge during the Black Monday crash in October 1987.

The unease then spread to Europe, where the Pan-European Stoxx index fell about 3 percent, with every major market on the continent recording declines.

The losses were set to continue in the United States. Stock futures for the S&P 500 were down more than 3 percent, and those for the Nasdaq fell more than 5 percent.

The drops followed a U.S. jobs report on Friday that showed significantly slower hiring in July, with unemployment rising to its highest level in nearly three years. This deepened fears that the world’s largest economy was stumbling and that the Federal Reserve may have waited too long on cutting interest rates.

At their meeting last week, Fed officials held interest rates at a two-decade high, where they have remained for a year. The central bank’s policymakers are set to meet again in mid-September.

Based on the weakness in the U.S. jobs report, Goldman Sachs said in a note that it now expected the Fed to cut rates at its next three meetings — in September, November and December — a more aggressive timetable for cuts than the investment bank had previously expected. Analysts at the bank raised their forecast for the probability of a U.S. recession in the next 12 months to 25 percent, up from 15 percent.

South Korea’s benchmark Kospi index fell more than 10 percent at one point. Equity markets in Taiwan, Singapore, Australia, Hong Kong and mainland China were all lower. Stocks in India, one of the best-performing markets in Asia this year, traded more than 2 percent lower.

Technology shares were hit particularly hard. The chip giants Samsung Electronics and Taiwan Semiconductor Manufacturing Company each fell 10 percent in Asia. European semiconductor players like ASML of the Netherlands and STMicroelectronics of Switzerland also fell. Futures for Nvidia and Intel, which are listed in New York, were lower.