DAX falls below 18,000 - biggest Nikkei loss since Corona
Stock markets have been rising for months, but they seem to be falling just as quickly now. "The market is currently seizing on any signs of weakness," says one analyst. "The recession bogeyman is back," says another.
Global recession fears and disappointing results from US tech giants are pushing stocks down again. The DAX fell well below the 18,000 point mark in early trading. The EuroStoxx50 also lost more than one percent.
Companies particularly sensitive to economic fluctuations also felt the heat. Shares of food delivery company Delivery Hero, tourism group TUI, and real estate giant Vonovia fell between 1.5 and 5 percent.
The selling wave of recent days continued in Asia: Japan's Nikkei 225 plummeted 5.8 percent, its biggest daily loss since March 2020, when the COVID-19 pandemic began.
Recession fears resurface
Weak US manufacturing indices and jobs data on Thursday caused unrest among investors, who fear that the expected rate cut by the US Federal Reserve in September may come too late for a soft landing of the US economy. The ISM index for manufacturing has been falling for the fourth consecutive month. The US jobs report for July, to be released later today, will be watched closely.
"The recession bogeyman has made a comeback," said Jochen Stanzl, chief analyst at broker CMC Markets. "If the US jobs data today comes in weak, we could see another dynamic sell-off like we saw yesterday."
The DAX lost 2.3 percent on Thursday. The Nasdaq 100 fell similarly. However, both indices still show a clear gain for the year: despite challenging conditions, especially in the German economy, the DAX has gained nearly 8 percent so far. Driven by ambitious AI promises, the tech-heavy Nasdaq has even gained over 14 percent.
Search for signs of weakness
Recently, the momentum of major US tech companies has noticeably slowed down. Poorly received quarterly reports from US tech giants Amazon, Intel, and Microsoft dragged the entire sector down. Japanese heavyweights Tokyo Electron and Advantest fell by 12 and 8 percent, respectively. "The numbers reported were not bad in the end," said strategist Jürgen Molnar of broker RoboMarkets. "But when high expectations meet nervous investors, even a single hair in the soup can trigger selling pressure."
"The market is currently seizing on any signs of weakness," said Rob Carnell, Asia specialist at ING Bank. "It's actively looking for bad news."
Intel stands out
Amazon's cautious outlook for the rest of the year is causing concern, despite the surprise high growth and profits of its promising cloud business in the last quarter. Customers are actively seeking bargains, said Amazon CFO Brian Olsavsky. Many companies are also tightening their belts and reviewing their AI investments. Amazon's stock fell nearly 6 percent in after-hours trading on the Wall Street.
Intel's weaker numbers particularly stand out. The US chip giant incurred a loss in the second quarter, plans to cut costs by $10 billion next year, and will also completely suspend dividends. Consequently, Intel's stock plunged by over 21 percent in after-hours US trading.
Trading in shares of tech giants like Amazon and Intel has been impacted by their recent quarterly reports, leading to significant stock price drops. Theuncertainty in the market has caused investors to seek out any signs of weakness, resulting in a selling wave that has affected various stock indices worldwide.
