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Home » Markets News » Global Stocks Drop on Recession Fears

Global Stocks Drop on Recession Fears

  • August 5, 2024
  • 337

On Monday, global equities experienced heavy losses as Wall Street joined a global equity rout that began in Japan on fears about a recession in the U.S.

On Monday, crude prices also dropped in a volatile session, hit by recession fears, but losses were limited by concerns that escalating conflict in the Middle East may hit crude supplies.

Wall Street’s fear gauge, CBOE’s volatility index, trimmed gains and was up 12.5 points to 35.98 after earlier rising 42 points to 65.73, the highest level since Mar. 2020.

Japan’s benchmark nikkei average had earlier closed 12.40% lower for the biggest one-day drop since Oct. 1987.

July’s softer-than-expected U.S. payrolls report on Friday had started a sell-off on Wall Street when investor bets for a Federal Reserve rate cut in September had doubled to 0.5%. Friday’s weak report came after disappointing earnings updates from several megacap tech companies.

Yardeni Research’s chief market strategist, Eric Wallerstein, said it was a confluence of things.

Wallerstein said everything from the weak U.S. jobs report and the disappointing U.S. earnings updates to the escalation of Middle East tensions and unwinding of yen-funded trades, played a role in the sell-off.

U.S. stocks trimmed losses slightly after the Institute for Supply Management reported that services sector activity rebounded from July’s 4-year low.

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