Global Stock Markets Plunge Amid US Economic Slowdown Fears

Stock markets in Europe and Asia saw significant declines on Monday, driven by fears of a US economic slowdown. The FTSE 100 in London fell by 2.3%, while the Euronext 100 dropped 3.5%. In Asia, Japan’s Nikkei 225 experienced its largest point drop in history, plummeting 12.4% (4,451 points).

The market turmoil follows disappointing US jobs data released on Friday, which raised concerns about the health of the world’s largest economy. The US added only 114,000 jobs in July, far below expectations, and the unemployment rate increased.

The yen’s strength against the US dollar, following the Bank of Japan’s interest rate hike last week, has also pressured Japanese stocks. This appreciation makes Japanese goods more expensive for foreign buyers, negatively impacting exporters.

Other Asian markets also suffered, with Taiwan’s main index and South Korea’s Kospi both dropping over 8%, India’s NSE Nifty 50 down 2.8%, Australia’s S&P/ASX 200 falling 3.6%, Hong Kong’s Hang Seng down 2.5%, and Shanghai’s index 1.4% lower.

Cryptocurrencies were not spared, with Bitcoin falling to around $50,000, its lowest since February.

In the US, the Federal Reserve’s decision to maintain interest rates, coupled with weak corporate earnings from major firms like Amazon and Intel, further dampened investor sentiment. The Nasdaq fell 10% from its recent peak, while the Dow Jones and S&P 500 dropped 1.5% and 1.8% respectively on Friday.

Shanti Kelemen, CIO at M&G Wealth, noted signs of a potential market slowdown, while Kei Okamura of Neuberger Berman attributed the Asian selloff to the yen’s appreciation. Veteran investor Warren Buffett’s Berkshire Hathaway also disclosed selling half its stake in Apple, adding to market jitters.

The recent declines highlight growing concerns about high borrowing costs, economic uncertainty, and the sustainability of the market rally fueled by optimism over artificial intelligence.