By Adedapo Adesanya
The global market is taking a heavy beating as major stock exchanges in the world head south amid fears about a potential recession in the United States.
From Asia to Australia to early trading in Europe, the markets are red as recession fears in the world’s largest economy sent investors fleeing from risk, with analysts pointing out that rate cuts would be needed to rescue growth.
Japan’s benchmark Nikkei average closed 12.4 per cent lower at 31,458.42, its largest one-day fall since October 1987, while the broader Topix lost 12.5 per cent to 2,220.91.
European stocks opened 1.8 per cent lower with France’s CAC 40 down over 2 per cent, Spain’s IBEX was nearly 3 per cent down, and the UK’s FTSE 100 was down over 1.7 per cent.
South Korea’s Kospi declined by over 8 per cent in afternoon trading and Australia’s S&P/ASX 200 shrank by 3.5 per cent.
Further losses are expected in Europe and on Wall Street today.
This also extended to the oil market as Brent crude, the international benchmark, dropped by 1.1 per cent or nearly $1 per barrel to $75.91 per barrel, the lowest since January.
Analysts noted that markets were on edge before Friday but weak payrolls have escalated a profound move across the globe.
This development may increase the chances that the US Federal Reserve will not only cut rates in September but ease by a full 50 basis points.
Goldman now expects 25 basis points cuts in September, November, and December based on a forecast that job growth will recover in August and there will be a sufficient response to any downside risks.
Analysts at JPMorgan were even more bearish, assigning a 50 per cent probability of a US recession.