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U.S. stock markets fell sharply on Monday as concerns grew that the U.S. economy was headed for a slowdown, with declines in Europe and Asia.
The tech-heavy Nasdaq index opened 6.3% lower after falling sharply last weekend, but the intraday decline narrowed.
Other major U.S. indexes also started sharply lower, while European and Asian stock markets plunged and Japan’s Nikkei Stock Average fell about 12.4%.
It comes after Friday’s weak U.S. jobs report heightened concerns about the world’s largest economy.
Last week, the US Federal Reserve also postponed interest rate cuts, which are normally pro-growth measures, in contrast to other central banks such as the Bank of England.
There are also concerns that the stocks of big technology companies, particularly those investing heavily in artificial intelligence (AI), are overvalued and are currently facing difficulties.
Chipmaker Intel last week announced massive layoffs and disappointing financial results, leading to speculation that rival Nvidia, which makes AI chips, may delay the launch of its latest products.
At the end of the New York trading day:
The Dow Jones index, made up of 30 of America’s largest publicly traded companies, pared losses to fall 2.6%, while the tech-heavy Nasdaq fell 3.4% and the S&P 500 fell 3%. Share prices of blockbuster tech stocks took a hit. Nvidia fell 6.3%, Amazon fell 4.1%, and Apple fell 4.8%. In Europe, Paris’ CAC-40 pared early losses to end 1.4% lower, while Frankfurt’s DAX and Britain’s FTSE 100 each fell about 2%.
Questions about the US economy
The market selloff began Friday as a weaker-than-expected U.S. jobs report fueled speculation that the economy was slowing.
U.S. employers added 114,000 roles in July, far less than expected as the unemployment rate rose from 4.1% to 4.3%.
The numbers raised concerns that America’s long employment boom may be nearing an end. This also sparked speculation about when and how much the Federal Reserve might cut interest rates.
Simon French, chief economist at Panmure Liberum, said whether the employment figures were an anomaly caused by Hurricane Beryl, a Category 5 storm that hit parts of the U.S. Gulf Coast in July, or whether companies were hiring fewer workers. First sign of decline.
The U.S. economy grew at an annual rate of 2.8% in the three months to the end of June, far stronger than most developed countries, according to the latest data.
Shanti Kelemen, chief investment officer at M&G Wealth, told the BBC’s Today program that it was difficult to say whether the US would enter a recession.
“You can choose evidence to create a positive story, or you can choose evidence to create a negative story,” she says.
“I don’t think it’s universally pointing in one direction yet.”
The crash in the US market is spreading worldwide due to concerns about the spread of infection.
Stock markets in Taiwan, South Korea, India, Australia, Hong Kong and Shanghai all fell between 1.4% and 8% on Monday, while Japan’s Nikkei Stock Average plunged.
Part of Japan’s problems lies in its currency, the yen, which has strengthened against the dollar since the Bank of Japan raised interest rates last week.
This made Tokyo stocks, and Japanese products in general, more expensive for foreign investors and buyers.
At the same time, Japan’s inflation rate rose more than expected in June, but the economy contracted in the first three months of this year.
