[ad_1]
NEW YORK/LONDON — Global stock markets suffered heavy losses on Monday as Wall Street joined a global stock rout that began in Japan.
Concerns about a potential U.S. recession sent the dollar lower against the yen and U.S. Treasury yields lower.
Oil prices also fell in a volatile trading session on recession fears, though losses were tempered by concerns that escalating conflict in the Middle East could disrupt crude supplies.
The CBOE Volatility Index, often referred to as Wall Street’s fear gauge, initially surged 42 points to 65.73, its highest level since the coronavirus outbreak in March 2020. The index later gave up gains to close at 35.98, up 12.5 points.
Japan’s benchmark Nikkei average closed down 12.40%, its biggest one-day drop since October 1987. The sell-off on Wall Street was triggered by a weaker-than-expected U.S. nonfarm payrolls report for July, which increased investor bets on a 50 basis point rate cut by the Federal Reserve in September. This followed disappointing earnings reports from several large technology companies.
“It’s really a confluence of factors,” said Eric Wallerstein, chief market strategist at Yardeni Research in Los Angeles. He cited the unwinding of yen funding trades, tensions in the Middle East, disappointing U.S. earnings forecasts and a weak jobs report as reasons for the market’s downturn.
U.S. stocks recovered some of their losses after the Institute for Supply Management (ISM) reported a rebound in service sector activity in July, easing recession fears. The ISM’s non-manufacturing purchasing managers’ index (PMI) rose to 51.4 from 48.8 in June, beating economists’ expectations of 51.0. A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the U.S. economy.
On Wall Street, the Dow Jones Industrial Average fell 1,090.72 points, or 2.74%, to 38,646.54 at 10:40 a.m. (1440 GMT). The S&P 500 fell 165.63 points, or 3.10%, to 5,180.93, while the Nasdaq Composite dropped 590.17 points, or 3.52%, to 16,185.99. The MSCI index of stocks across the globe fell 26.19 points, or 3.33%, to 761.02, having earlier hit a low of 756. The Euro Stoxx 600 fell 2.29%.
In the U.S. Treasury market, yields fell to a more than one-year low, and a key part of the yield curve turned positive for the first time in two years, reflecting growing concerns that the U.S. economy could fall into a recession. The benchmark 10-year Treasury yield fell 2.3 basis points to 3.773%, and the 30-year Treasury yield fell 3.4 basis points to 4.0772%. The 2-year Treasury yield, which is usually in line with interest rate expectations, rose 0.9 basis points to 3.8811%.
In the foreign exchange market, the yen surged to a seven-month high against the dollar as traders unwound carry trades, believing that recent U.S. economic data increased the likelihood of a U.S. recession and further interest rate cuts by the Federal Reserve. The dollar index, which measures the greenback against a basket of currencies, fell 0.53% to 102.60. The euro rose 0.5% to $1.0962, while the dollar fell 2.12% against the yen to 143.44.
In the energy market, the price of US crude oil fell by 0.71% to $73 per barrel, and the price of Brent crude oil fell by 0.55% to $76.39 per barrel. In the precious metals market, the safe-haven appeal of gold has weakened, with spot gold falling by 1.98% to $2,394.99 per ounce and US gold futures falling by 1.51% to $2,389.00 per ounce.
related
[ad_2]
Source link
