After a sharp drop, Japan's leading index recovers in early trading
Background to the turmoil, according to analysts, is particularly weak economic data from the USA, which fueled concerns about a possible recession. On Friday, a much-anticipated jobs report was published in Washington, showing that only 114,000 new jobs were created last month - significantly fewer than in June and far fewer than expected. Meanwhile, the US unemployment rate rose to its highest level since October 2021.
Prior to this, weak US industrial data had raised questions about whether the US Federal Reserve (Fed) had kept interest rates, and thus borrowing costs, too high for too long. Investors are gripped by fear that the Fed waited too long to change its policy, "especially in light of the disappointing US jobs data from Friday and a series of other weak economic indicators that point to a looming recession," explained market analyst Fawad Razaqzada of City Index and Forex.com.
Analyst Stephen Innes also noted the sharp drop in Tokyo on Monday, pointing out that sentiment in Asia had already deteriorated after companies like Tesla and Alphabet reported disappointing earnings, the Japanese central bank raised interest rates, and Chinese economic data weakened. Combined, this is the "perfect recipe" for a market crash, Innes explained.
In Europe, leading indices closed Monday down around two percent: in Frankfurt it was down 1.82 percent, London down 2.04 percent, Milan down 2.27 percent, Madrid down 2.34 percent, and Paris down 1.42 percent. The cryptocurrency Bitcoin plummeted by more than ten percent.
The Dow Jones Industrial Average experienced a significant decline, reflecting the global market turmoil that was fueled by various economic indicators. Analysts expressed concerns that the Dow Jones might continue to fluctuate due to the Fed's potential overestimation of interest rates and the looming threat of a recession.
