Recession fears in the US cause Asian stock markets to fall | Business News

Stock markets in Asia fell sharply on fears that the US economy could be heading towards a recession.

Japan’s Nikkei 225 stock index fell more than 12% at Monday’s close – its biggest drop since “Black Monday” in October 1987 – while the broader market index Topix also fell a similar level .

South Korea’s Kospi fell more than 9%, while Taiwan’s Taiex index fell 8.4%.

Markets in Singapore, Indonesia, Thailand and the Philippines also fell by around 2% and 3%.

The falls led to the activation of circuit breakers – in which trading in shares and derivatives is interrupted for 20 minutes – by some exchanges during the day.

This comes after Friday’s US labor market data was released much lower than expected for Julycausing the country’s stock markets to fall.

About 114,000 jobs were created during the month – significantly below the 175,000 new jobs predicted by Wall Street.

The value was the weakest since December last year and the second weakest since the beginning of the Covid pandemic in the West in March 2020.

Robert Carnell of financial services firm ING said: “What we are seeing now is a situation where the market sees what is happening in the US macroeconomy as a sign of recession.”

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It also comes after the US Federal Reserve decided on Wednesday not to cut interest rates from the 5.25% to 5.5% range in which they have remained since July last year. Markets expect the central bank to make a cut in September.

Economists at Goldman Sachs said they believe there is now a 25% chance of a U.S. recession, up from the previous estimate of 15%.

Global concerns have also been compounded by worries about the strength of China’s economy and several reports of weak earnings from big technology companies last week as investors grow nervous about the potential returns on investment in AI.

Fears about a possible recession in the US – along with constant concerns about tensions in the Middle East – also caused drops in the price of oil.

A barrel of benchmark Brent crude fell more than 1.2% to just under $76 (£60) on Monday morning.

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