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Stocks, global currencies fall amid fears of recession, rising unemployment
(MENAFN) On Monday, global Stocks experienced a significant downturn, with both the dollar and the euro falling by 2 percent against the yen, as investor concerns over a potential U.S. recession intensified. In Europe, major stock indices opened lower, reflecting widespread anxiety in the markets. Paris fell by 2.42 percent, London by 1.95 percent, Frankfurt by 2.49 percent, Amsterdam by 3.05 percent, Milan by 3.31 percent, Zurich by 2.97 percent, and Madrid by 2.79 percent.
Stephen Innes, an analyst at SPI Asset Management, attributed this decline to the U.S. jobs report released on Friday, which led to lower yields on both stocks and bonds on Wall Street. The report, highlighted by Agence France-Presse, revealed an unexpected rise in the U.S. unemployment rate to 4.3 percent in July, the highest since October 2021, surpassing the anticipated 4.1 percent.
The increase in unemployment significantly impacted bond yields, suggesting that the Federal Reserve might be compelled to cut interest rates more aggressively than previously expected. Innes remarked that if the Fed opts for a 50 basis point rate cut in September, rather than the anticipated 25 basis points, it would be an acknowledgment of its delayed response in easing monetary policy.
This perspective is echoed by Deutsche Bank analysts, who noted that the current market expectations for the frequency of Fed rate cuts over the next 12 months are typically seen only during recessions. The substantial drop in bond yields reflects the market's anticipation of more substantial rate cuts, further fueling concerns about the health of the U.S. economy and its impact on global financial stability.
Stephen Innes, an analyst at SPI Asset Management, attributed this decline to the U.S. jobs report released on Friday, which led to lower yields on both stocks and bonds on Wall Street. The report, highlighted by Agence France-Presse, revealed an unexpected rise in the U.S. unemployment rate to 4.3 percent in July, the highest since October 2021, surpassing the anticipated 4.1 percent.
The increase in unemployment significantly impacted bond yields, suggesting that the Federal Reserve might be compelled to cut interest rates more aggressively than previously expected. Innes remarked that if the Fed opts for a 50 basis point rate cut in September, rather than the anticipated 25 basis points, it would be an acknowledgment of its delayed response in easing monetary policy.
This perspective is echoed by Deutsche Bank analysts, who noted that the current market expectations for the frequency of Fed rate cuts over the next 12 months are typically seen only during recessions. The substantial drop in bond yields reflects the market's anticipation of more substantial rate cuts, further fueling concerns about the health of the U.S. economy and its impact on global financial stability.
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