After worrying job market figures, investors are expecting a significant slowdown in the US economy. Stock markets, especially in Asia, are suffering huge or unprecedented falls this Monday. The same goes for cryptocurrencies.
Has the Fed overdone it and is the US economy suffering? This is the rumor that is increasingly circulating on stock markets around the world. Friday’s US labor market figures clearly worried investors, in a “sharp change in perception” compared to the beginning of last week, according to KBC chief economist Bernard Kepenne. They are dumping their shares en masse.
Unemployment rose to 4.3 percent, its highest in three years. Jobs were added by 114,000, compared with estimates of 175,000 and a 12-month average of 215,000. With the recent surge in immigration, economists estimate that 200,000 new jobs are needed per month.
Added to this are the threats made by Iran against Israel this weekend, in an escalation of tensions in the Middle East.
Bloodbath in Asia
This slowdown and fear of recession is therefore causing the stock markets to fall. First in the United States: the S&P 500 lost 1.84% last Friday, after the figures were published. But the impact is also being felt elsewhere in the world. A faltering American economy means a strengthening yen: the Japanese stock market (Nikkei 225) lost 5.34% in anticipation of these figures. This is the worst fall since 1987 and the second largest in the history of the land of the rising sun.
And the bleeding continues this Monday morning: at the close of trading, the index posted a 12.4% drop – making it its new biggest drop in history according to AFP. After reaching records in July, the Japanese market therefore seems to be entering a bear market, according to Investing.com. Investors are also taking advantage of these peaks to sell and collect profits (which also explains the falls). For UBS, the falls should continue and the bank advises investors not to want to “catch a falling knife”. In Seoul, the fall is close to 9%, making it the biggest since March 2020, at least.
In Europe, the markets have just opened. At the time of writing, the CAC 40 is down 2.6%, the Bel 20 is down 3.4% and the Euro Stoxx 50 is down 3.4%. These falls are evolving rapidly, this Monday risks becoming a bloodbath here too.
In the United States, where the stock market only opens in the afternoon Belgian time, futures are already down sharply. -5% for the Nasdaq, -2.6% for the S&P 500.
Warren Buffett
More headaches are expected on Monday. Over the weekend, it emerged that Warren Buffett, head of the Berkshire Hathaway conglomerate, had sold his shares massively. His position in Apple, which represents about half of his portfolio, was cut in half. In total, he sold $75 billion worth of shares (including a few billion in Bank of America shares) during the second quarter, according to the results published on Saturday.
He is nicknamed the Oracle of Omaha… If he sells so much, it makes other investors fear that he is expecting the worst, and so they will sell too. Tech should therefore have a bad day.
Crypto
Cryptocurrencies are caught in the fall, which could revive the debate on their quality as a safe haven and alternative or independent of stock indices. Bitcoin lost 13% (over the last 24 hours) and is worth $52,800 at the time of writing, its lowest since February. Ethereum even lost 20%, to fall to $2,325.
