Global financial markets panic over risk of US recession

In Europe, the main global indices are in the red. The Paris Stock Exchange lost 1.42% at the close on Monday evening.

Stock markets are plummeting all over the world on Monday, August 5, alarmed by a slowdown in the American jobs market, which is causing investors to fear a recession in the United States. In Europe, Paris lost 1.42% at the close, London 2.04%, Frankfurt 1.82%, Milan 2.27%. The pan-European stock index Stoxx 600 fell by 2.17%.

The markets have indeed taken note of “a whole battery of extremely bad indicators which were surprising” negatively in the United States, Aurélien Buffault, bond manager at Delubac AM, told AFP, citing in particular the data on the American employment market for July. The unemployment rate rose to 4.3% in July, while it was 3.7% in January. However, this sharp decline in stocks is also “amplified by seasonality”qualifies Aurélien Buffault, who explains that the month of August is traditionally negative for financial markets, because investors avoid any risk-taking.

In detail, the three main Wall Street indices were all penalized around 6:10 p.m. on Monday: the Nasdaq tumbled by 2.57%, carried by the decline of American technology giants. The broader S&P 500 index fell by 2.14% and the Dow Jones by 1.94%. Earlier in Asia, the Nikkei index in Tokyo also plunged by 12.4%, the worst drop in points in its history. Technology stocks, dearly valued, faltered in the face of the macroeconomic environment, and in the face of doubts about the sector’s growth prospects. Within the S&P 500 index, the information technology sector is the one that suffered the most, with a drop of 2.92%.