Fear of a U.S. recession sends stock markets into a slump
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 highly 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. At the same time, the US unemployment rate rose to its highest level since October 2021.
On the previous day, weak US industrial data had raised questions about whether the US Federal Reserve (Fed) had kept interest rates and thus also 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 pointing to a looming recession," explained market analyst Fawad Razaqzada of City Index and Forex.com.
Analyst Stephen Innes also pointed out that the mood in Asia had already deteriorated, with companies like Tesla and Alphabet posting disappointing earnings, the Japanese central bank raising interest rates, and Chinese economic data weakening. Combined, this was the "perfect recipe" for a market crash, Innes explained.
On Monday, stock prices also fell at other Asian trading places. In Hong Kong and Shanghai, but also in Mumbai, Bangkok, Manila, and Jakarta, prices fell. In Europe, the leading indices in Frankfurt, London, and Paris were down around two percent in the afternoon. The cryptocurrency Bitcoin fell by more than ten percent.
However, the DZ Bank pointed out that August and September traditionally belong to the weakest months of the year for the stock market. Current market turbulence therefore does not necessarily have to be a harbinger of a sustained crisis.
"At the latest after the US jobs report on Friday, a mood decline has spread across international financial markets," explained DZ Bank analyst Soeren Hettler. However, looking more closely, the year 2024 is still shaping up positively so far. The major stock exchanges have been predominantly in the plus since the beginning of the year. Also, the earnings expectations of the companies in the major indices for the next two years speak for growth.
Following the disappointing US jobs report on Friday, causing concerns about a potential recession, global investors are worried that the Federal Reserve may have kept interest rates too high for too long in the United States of America. The weak economic data from the USA has fueled these fears, as indicated by market analyst Fawad Razaqzada.
Despite the current market turbulence in various regions, including the United States of America, major stock exchanges have remained predominantly in the positive since the beginning of the year, according to DZ Bank analyst Soeren Hettler.
