A disappointing jobs report spurred investor fears that the world’s largest economy is headed toward a recession…reports Asian Lite News
Global markets were in the deep red on Monday as the US economic slowdown weighed heavily on the financial markets.
Heavy selling pressure was seen in all major Asian markets. Japan crashed by 10 per cent, Seoul tumbled over 8 per cent, Taipei fell by 4.43 per cent, Jakarta was down nearly 2 per cent, Hong Kong and Shanghai were down 1.43 per cent and 0.83 per cent) respectively.
South Korea’s news agency Yonhap reported that due to a crash trading in the local benchmark index KOSPI 200 index held for five minutes.
The US stocks fell for the second consecutive session on Friday last week, with the Dow Jones Industrial Average sliding 1.51 per cent and the tech-heavy Nasdaq Composite sinking 2.43 per cent.
A disappointing jobs report spurred investor fears that the world’s largest economy is headed toward a recession, the report said
Indian stock markets also opened in the deep red on Monday. At 11 a.m., the Sensex was at 78,798, down 2,183 points or 2.70 per cent, and the Nifty was at 24,061, down 657 points or 2.66 per cent.
Santosh Meena, Head of Research, Swastika Investmart said, “The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the USA after extremely poor job data, which spooked market sentiment.”
“The rally in the global stock markets has been driven mainly by consensus expectations of a soft landing for the US economy. This expectation is now under threat with the fall in the US job creation in July and the sharp rise in the US unemployment rate to 4.3 per cent. Geopolitical tensions in the Middle East also are a contributing factor,” other experts said.
Nifty, Sensex plunges
Indian markets experienced one of the worst falls on Monday with both the indices Nifty, and Sensex registering high losses during the opening trade. Indian stock markets followed the global bloodbath.
The Nifty 50 index declined 414.85 points or 1.68 per cent to open at 24,302.85 points while the BSE Sensex slumped 2393.76 points or 2.96 per cent to open at 78,588.19 points.
In the broad market indices, all indices including Nifty Next 50, Nifty 100, Nifty Midcap, and Nifty Small cap declined around 2 per cent during the opening session.
“Expect more selling in the markets, but as we saw on June 4th and in July post the Union Budget, the strong domestic liquidity could provide a safety net for the Indian markets, in a worsening global sentiment environment” said Ajay Bagga, Banking and Market Expert.
He further added, “Globally markets are reacting after on Friday, the Sahm Rule got triggered, as US unemployment reached 4.3 per cent. This is predicting a US recession”.
The “Sahm Rule” is a recession indicator created and named after Claudia Sahm, a macroeconomist who worked at the Federal Reserve and the White House Council of Economic Advisers
In the Asian stock markets, the Japanese markets are down 20 per cent from their recent all-time highs. The Nikkei 225 index declined more than 1600 points or 4.85 per cent to 34,247.56.
The markets of Japan faced pressure after the Bank of Japan announced a well-telegraphed rate hike, which led to an unwinding of Yen Carry trades, as the Yen appreciated.
In Taiwan markets the Taiwan Weighted Index also declined by more than 6 per cent, and Singapore’s market also declined with the Straits Times index declining around 3 per cent.
The stock markets globally are facing selling pressure after the US economic data has shown weakness, with questions being raised on the Fed’s ” soft landing” of the US economy narrative. (ANI)
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