'Black Monday' for global stock markets, pressure to cut interest rates increases, recession fears increase

The global stock sell-off intensified on August 5, as the Dow Jones Industrial Average dropped more than 900 points at the open and Japan's Nikkei 225 stock index recorded its biggest one-day drop ever.

A screen in Tokyo shows the Nikkei 225 stock index on 'Black Monday' for global stock markets. (Source: AP)

Global stock market news all assessed that the market today experienced a dark trading day, causing recession fears to increase sharply. Besides the US Dow Jones index falling sharply by about 3%, the S&P 500 and Nasdaq Composite also plunged by about 4% and 6% respectively.

The main cause of this crisis was the US July jobs report released last week, which was much lower than expected. This figure raised concerns about the possibility of the world's largest economy falling into recession.

Japan's Nikkei 225 was hit even harder, falling more than 12%, its biggest drop since 1987. Tech stocks were also hit hard, with NVIDIA falling more than 14% and Apple down more than 8%.

“Investors are experiencing global pain,” said Dan Ives, managing director of equity research at investment firm Wedbush, adding that the U.S. market is “trading in the red across the board.”

The US July jobs report showed that just 114,000 new jobs were created, far below economists' forecast of 185,000 jobs. The unemployment rate rose to 4.3%, the highest since October 2021.

The rapid rise in the unemployment rate from 3.7% to 4.3% this year has triggered the “Sahm Rule,” a recession indicator that holds that a 0.5 percentage point increase in the unemployment rate over a 12-month period typically signals an impending recession.

On August 4, Goldman Sachs economists raised the probability of a US recession next year from 15% to 25%.

Given the tense situation, investors are calling for the Federal Reserve to cut interest rates sharply at its next meeting in September. Some investors are even asking for an emergency rate cut as early as this week.

It's an unprecedented move, but it reflects the level of concern about the current economic situation. A rate cut could help stimulate the economy and support the stock market. However, the final decision is up to the Fed and will depend on a variety of factors.

In the context of global financial markets undergoing strong fluctuations, investors need to closely monitor developments in the economic situation and monetary policy to make appropriate investment decisions.

The sharp decline in stock markets and fears of a recession are causing uncertainty for the global economy. Governments and central banks need to take timely measures to prevent the situation from worsening.

This is a challenging period for the world economy and its impact will be felt for some time to come.

Source: https://baoquocte.vn/day-thu-hai-den-toi-cua-thi-truong-chung-khoan-toan-cau-ap-luc-giam-lai-luc-tang-cao-noi-lo-suy-thoai-kinh-te-gia-tang-281463.html