The IBEX 35 lost around 2 percent and was slightly off the day’s lows after the opening of the New York Stock Exchange, given the possibility that the US economy could enter a recession.
In the first changes, the S&P 500 The Nasdaq 100 stock was trading down 4 percent, while the Nasdaq 100 sank more than 5 percent. The technology index was hit hard by news that Warren Buffett has sold half of his Apple portfolio. The iPhone maker therefore opened with a 11 percent drop.
In the rest of the European stock markets, the Eurtostoxx50, the Cac and the Dax are down more than 2 percent, while S&P 500 futures are pointing to a 2.5 percent drop on Wall Street.
In the Asian session, the Nikkei ended Monday with a historic 12 percent drop, the biggest fall since 1987, while Nasdaq futures are forecasting losses of 6 percent, with technology companies being severely punished amid fears that the artificial intelligence bubble will burst.
The employment figures released on Wall Street last Friday opened a can of worms, showing a much larger than expected increase in unemployment in July, leaving the unemployment rate at a three-year high.
Volatility soars
For this reason, the market is quickly discounting that la Fed has fallen behind the curve and is far behind in cutting rates, increasing the likelihood that the US economy will enter a recession.
The analyst Manuel Pinto He said volatility in the markets has soared as concerns about the US economy and the results of major technology companies have failed to meet expectations have grown.
“Much of the strength the market has shown this year has been based on confidence in a ‘soft landing’, where central banks would be able to stabilise inflation without leading the economy into a sharp contraction,” Pinto added.
Global wave of risk aversion
In this climate of deep risk aversion, Goldman Sachs raised the probability of a recession in the next year to 25 percent from 15 percent previously, although the bank stressed that the risk of recession still remains “limited.”
The economy continues to look “good overall,” there are no major financial imbalances and the Fed has plenty of room to cut interest rates and can do so quickly if needed, Goldman Sachs said.
However, the US bank’s attempt to calm things down fell on deaf ears and a tsunami of distrust swept through the Tokyo stock market, causing a sharp appreciation of the yen (safe haven currency) which further harmed Japanese exporters.
Buffett scares the market even more
As if that were not enough, this weekend it was revealed that Warren Buffett has sold half of Berkshire Hathaway’s stake in Apple, further accelerating sales among the tech companies.
It was raining on wet ground, as these companies already suffered a heavy punishment last week, after learning of “the high amounts invested in Artificial Intelligence (AI)”, explained the analysts at Link Securities.
While it is true that the technology companies justified their spending on the grounds that it is an investment for the future, “it will take them several years to recover the investment made,” added Link Securities.
Bleeding in the IBEX 35
Within the IBEX 35, banks took the brunt of the punishment, although less intensely than at the opening. Unicaja and Banco Sabadell lost 4 percent, while BBVA lost 3 percent, and Caixabank, Bankinter and Banco Santander lost 2 percent.
In addition to financial institutions, Fluidra leads the falls in the index with a loss of more than 5 percent, while Grifols and IAG have lost 4 percent.
At the lower end of the index, not a single stock was trading with gains, and those with the fewest losses were Acciona Energía and Naturgy, with falls of 1.5 percent.
Sharp drop in oil prices
In other markets, Brent crude oil fell the most in seven months, falling to $76 a barrel, due to fears of recession and growing tensions in the Middle East, given the possibility of a retaliatory attack by Iran on Israel.
The currency market was more stable, with the euro trading little changed against the dollar. On the cryptocurrency market, however, Bitcoin plummeted by more than 12 percent, marking its worst week since the bankruptcy of FTX.
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