Global stock markets tumble amid fears of recession

[New Sancai Compilation First Release] U.S. stock index futures plummeted on August 5, 2024, with stock index futures related to the Nasdaq index falling nearly 6%, as last week's weak data triggered concerns about the United States falling into recession and spread to global markets.

Stock markets from Asia to Europe were hammered and bond yields fell as investors turned to safe-haven assets and bet the Federal Reserve needed to cut interest rates quickly to stimulate economic growth. European stocks fell to near six-month lows, with only a few stocks rising, and Japan's Nikkei also closed down 13%.

All large-cap stocks fell

All large-cap and growth stocks - the main drivers of the index's all-time highs earlier this year - were down sharply in premarket trading.

Apple shares fell 8.4% after Berkshire Hathaway slashed its stake in the iPhone maker by nearly 50%, a sign of billionaire investor Warren Buffett's concern for the U.S. There is growing caution about overvaluation of the overall economy or the stock market.

Nvidia shares fell 9.7% after a report that its upcoming artificial intelligence chips were delayed due to design flaws. Microsoft fell 4.7% and Alphabet fell 6%.

As of 8:34 a.m. Eastern Time on August 5, the Dow Jones E-mini index fell 1,200 points, or 3.01%; the S&P 500 E-minis index fell 236.50 points, or 4.40%; the Nasdaq 100 E-minis index fell 236.50 points, or 4.40%; The minis index fell by 1,091.75 points, or 5.88%.

Weak jobs reports and shrinking manufacturing activity in the world's largest economy, coupled with downbeat forecasts from big U.S. technology companies, pushed the Nasdaq 100 and Nasdaq Composite into corrections last week.

The disappointing employment data also gave rise to the so-called "Sahm Rule," which many believe is a historically accurate recession indicator.

The probability of a 50 basis point rate cut is 98.5%

According to CME's FedWatch tool, traders now see a 98.5% chance that the U.S. Federal Reserve will cut its benchmark interest rate by 50 basis points in September, compared with an 11% chance last week.

Large Wall Street brokerages have also revised their 2024 Federal Reserve interest rate forecasts to show that the central bank will strengthen policy easing.

Ronald Temple, chief market strategist at Lazard, said, "I don't want to believe that the Fed will cut interest rates by 50 basis points to start the easing process, but if the data over the next seven weeks is consistent with this week's data, the Fed will We should take a radical approach.”

This week, a number of Federal Reserve officials will speak on economic and monetary policy, and any sign of a rate cut could soothe jittery investors' nerves.

Cryptocurrency-related stocks fell after Bitcoin hit a five-month low. Coinbase Global fell 13%, while MicroStrategy and Riot Platforms fell 15.8% and 12.2% respectively.

Large U.S. banks fell one after another, with Bank of America falling the most, down 4.5%.

Nikkei looks familiar in 1987

Chris Beauchamp, chief market analyst at IG Group, said: "European markets will not be affected in any way when the Nikkei Index experiences its largest decline in nearly 40 years."

"These things usually don't stop right away and take a few days to resolve...but the initial panic appears to be over."

Japanese stocks tumbled on Monday, posting their biggest one-day drop since the Black Monday sell-off in 1987, as global stocks tumbled last week, economic worries and a sell-off in investments funded by cheap yen.

(Compiled by: Wang Jimin)
(Editor: Jiang Qiming)
(Source of the article: Compiled and published by New Sancai)