Stock markets experienced a significant downturn on Monday, driven by mounting concerns that the US might be on the brink of a recession. This uncertainty has prompted widespread panic-selling among investors, as reflected in recent market data.
Rising US Unemployment and Federal Reserve Speculations
The turmoil began with the release of the July payrolls report last Friday, which revealed an unexpected rise in the US unemployment rate. This development has led to speculation that the Federal Reserve may implement a substantial rate cut of 50 basis points in September. Consequently, economists are now engaged in intense discussions about the overall health of the US economy, considering its substantial influence on the global financial market.
US and Asian Markets Take a Hit
US stocks ended last week on a sharp decline, with the technology-heavy Nasdaq Composite entering correction territory. The trend continued into Monday with further losses.
South Korea’s stock market endured its worst trading session since the 2008 global financial crisis. The benchmark KOSPI stock index plummeted by 8.8%, driven by a steep decline in tech stocks. This rapid sell-off triggered circuit breakers for the first time since March 2020.
BREAKING 🩸
$2.9 TRILLION wiped out from stocks this morning due to fears of a global recession.THE WORST DAY SINCE 2020 COVID CRASH pic.twitter.com/PIRTYxZpBe
— Radar🚨 (@RadarHits) August 2, 2024
Trading Halts in Istanbul and Taiwan
In Istanbul, the stock market halted trading twice on Monday due to significant losses. The first halt occurred at 07:25 GMT after the benchmark BIST-100 index dropped by 7.07%, accompanied by an 8.73% fall in the banking index.
Taiwan’s stock market also faced severe declines, with the Taiex, the weighted index on the Taiwan Stock Exchange, falling by over 8% on Monday. The plunge significantly impacted chip giant TSMC, which produces more than half of the world’s silicon wafers, dragging its stock down by 9.3%.
Indian Markets and Cryptocurrency Impact
India’s stock markets were not spared either. The Sensex and the Nifty 50 experienced heavy sell-offs early on Monday, each declining over 3% in intraday trading. Analysts attributed these losses to fears of a US recession and rising tensions in the Middle East.
The cryptocurrency market felt the ripple effects of the global stock market turmoil as well. Bitcoin’s price dropped below $50,000 for the first time since February. It reached a low of $49,351 in early Monday trading and, although it recovered slightly above the $50,000 mark, it remained down 13% for the day at 08:00 GMT.
Japan’s Nikkei Index Plummets
Japan’s Nikkei index also suffered a substantial hit, tumbling by 13% in early Monday trading and reaching seven-month lows. Investors noted that such losses had not been seen since the 2011 global financial crisis.
BREAKING: Japan’s stock market, the Nikkei 225, is currently set to post its largest 2-day drop in history.
This is an even larger drop than the Black Monday crash of 1987, per Zerohedge.
Now, South Korea has halted ALL sell orders as markets crash.
Panic selling has arrived. pic.twitter.com/eoxEeaxIh8
— The Kobeissi Letter (@KobeissiLetter) August 5, 2024
How will South African stocks perform?
