Global markets begin new week with historic downward due to rising recession fears
(MENAFN) Global markets began the new week under historic downward pressure driven by mounting recession concerns in the United States, which led to intensified selling activity. This selling-dominated trend continued as US employment data exacerbated fears of an economic downturn. Meanwhile, the Federal Reserve kept its policy rate unchanged on Wednesday, hinting at a potential rate cut in September.
The US non-farm employment report revealed an increase of just 114,000 jobs, significantly below expectations. Additionally, the job growth figure for June was revised downward from 206,000 to 179,000. Despite these disappointing numbers, Chicago Fed President Austan Goolsbee emphasized that the bank would not overreact to a single report, noting that more data would be available before the next policy meeting. However, he did acknowledge that a rise in the unemployment rate above 4.1 percent would necessitate a response. Richmond Fed President Thomas Barkin also noted that one more employment report would be released before the Fed's next policy decision.
The likelihood of the Fed cutting its policy rate by 50 basis points in September surged to over 75 percent in money markets. In response to recession fears, demand for safe-haven assets increased, with the US 10-year bond yield balancing at 3.73 percent after dipping to 3.72 percent, its lowest since June 2023. The US Dollar Index fell to 102.9, and the price of gold per ounce dropped by 0.3 percent, currently trading at USD2,435. Bitcoin experienced a steep decline of over 10 percent, falling to USD52,900.
In the commodities market, the price of Brent crude oil closed at USD77.3 per barrel on Friday, marking a 3.3 percent decrease, and began the new week at USD76.2 per barrel, down 1.65 percent. On Wall Street, the Nasdaq index plunged 2.45 percent, the S&P 500 fell 1.84 percent, and the Dow Jones dropped 1.51 percent on Friday. US index future contracts started Monday with nearly a 4 percent decline, reflecting the pervasive anxiety in the markets.
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