Global mkts tank 10% amid US recession fears

According to market analysts, equity markets are reacting to economic weakness, highlighted by disappointing earnings from a few US consumer-focused companies. The world’s largest cryptocurrency Bitcoin went down almost 14% to $54,155

What Led To Crash?

♦ Bleak US job scenario

♦ Fear of a reverse Yen carry trade

♦ Interest rate hike in Japan

♦ Geopolitical tensions in Middle East

Mumbai: 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 had 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.

The financial markets reacted to a report which showed that hiring by US employers slowed last month.

According to market analysts, equity markets are reacting to economic weakness, highlighted by disappointing earnings from a few US consumer-focused companies.

“It’s crucial to monitor these developments closely in the coming months,” said Trideep Bhattacharya, President and CIO-Equities, Edelweiss MF.

The VIX, an index that measures how worried investors are, fell about 20 per cent. The world’s largest cryptocurrency Bitcoin went down almost 14 per cent to $54,155. Yeap Jun Rong of IG said that investors will be watching for data on the services sector from the US Institute for Supply Management.

Abhishek Banerjee, smallcase Manager and Founder at Lotusdew, said that bad job reports and impending conflict in the Middle East are all contributing to risk off today.

“However, indicators like oil price volatility, US yields and unfilled positions indicate the opposite. I think today is one of the buy-on-dip days for a long-term investor,” he added. Santosh Meena, Head of Research, Swastika Investmart said that the global market is reeling as bears enter with a cocktail of bad news.