Thus, the financial markets ended a difficult day waiting for Iran’s response to Israel

World financial markets ended trading on Monday with a sharp decline, affected by the geopolitical tension in the Middle East region, as well as growing signs of American deflation, while activity rose. Department of services In the United States in July from the lowest level in four years amid growing orders and hiring, which could help reduce fears. Decline Caused by the high level The unemployment Last month.

The Institute for Supply Management said on Monday that its non-manufacturing purchasing managers’ index rose to 51.4 points last month from 48.8 in June, when it reached its lowest level since May 2020, according to what it said Reuters.

In New York financial markets, the main US stock indexes fell sharply on Monday, with the Nasdaq falling more than 3%, after fears of a US recession shook global markets and investors incentive to avoid risky assets, while Apple shares fell after Berkshire Hathaway reduced its stake in the company. Fears of a recession followed weak economic data last week, including Friday’s US jobs report.

Financial market indexes pared losses after data showed service sector activity rebounded from a four-year low amid a rise in orders and employment. Apple shares fell 4.4% after Berkshire Hathaway cut its stake in the iPhone maker in half. Billionaire investor Warren Buffett also allowed Berkshire’s cash flow to increase to $277 billion. NVIDIA shares fell more than 6%, while Microsoft shares fell 3.4% and Alphabet shares fell 2.5%.

Chicago Fed President Austin Goolsbee played down fears of a recession, but said Fed officials need to be aware of changes in the environment to avoid excessive restrictions on interest rates, said Oliver Burchi, senior vice president and a consultant at Wealthspire Advisors in Westport, Connecticut due to higher than normal monetary policy there is a slowdown in the economy. the economy.”

Accordingly, the Dow Jones industrial average fell in the US financial markets by 2.48% to 38,750.38, the Standard & Poor’s 500 Index by 2.85% to 5194.33, and the Nasdaq Composite Index by 3.36% to 16,212.65, Volat Stock Index , and the Chicago Index. which is the “fear gauge” on Wall Street, has risen dramatically.

The weak jobs report and declining manufacturing activity in the world’s largest economy, along with disappointing expectations from major US technology companies and the Nasdaq Composite Index on Friday, confirmed it was in correction territory. The magnum opus of seven stocks, the main driver of indexes hitting record highs this year, is expected to shave nearly $900 billion off the companies’ total market value, according to the Associated Press .

Traders also attributed some of the weakness in stocks to tighter conditions in carry trades, where investors borrow money from low-interest-rate economies such as Japan or Switzerland to hedge their bets. fund it in higher yielding assets elsewhere. US Treasury yields fell to their lowest level in a year, and the closely watched gap between two-year and 10-year Treasuries turned positive for the first time since July 2022, which usually indicates that the economy is heading towards a recession.

Traders now see a 92.5% likelihood that the US central bank will cut benchmark interest rates by 50 basis points in September, compared with 11% last week, according to the FedWatch tool Chicago Mercantile Exchange.

In the oil market, Brent crude futures fell 0.66% to settle at $76.30 a barrel, while US crude futures fell 0.79% to settle at $72.94.

In European financial markets, the main stock index recorded its lowest level in more than six months on Monday, as fears of a slowing US economy pushed global stocks to decline, while energy and utility companies led large-scale losses. The STOXX 600 index closed down 2.2%, but moved away from the lowest level it recorded during the session. The continent’s index recorded its biggest three-day decline since June 2022, and closed below the key 500-point level for a second day.

There was an uptick in risk amid fears that the United States could slide into recession, which weighed heavily on trading on Wall Street and other stock markets, and heightened hopes for lower interest rates to spur economic growth. News about the recovery of the US services sector gave some relief to traders, which helped US and European stocks to offset some of the day’s losses.

As for other European indices, Germany’s DAX index, France’s CAC 40 index, the British Financial Times Index, and Spain’s IBEX 35 index declined by levels between 1.4% and 2.3%, reach their lowest levels in several months during the day.

In a difficult session for all European sectors, the energy sector recorded its lowest level in six months, tracking the impact of the decline in oil prices, while shares of utility companies touched to their lowest level in over a month. Banking sector shares also fell to their lowest level in four months on fears that the US economy will enter recession.

Meanwhile, the technology and chemicals sectors were among the least affected, although each fell by around 1%. On the corporate level, shares in Europe’s biggest copper producer, Eurobus, fell 12% after it reported lower-than-expected pre-tax profits in the third quarter. On the other hand, Infineon shares rose 1.3% after plans to cut jobs, while OCI shares jumped 13% against the backdrop of plans to sell a clean ammonia project in Texas to Woodside Energy for $2.35 billion.

Earlier in Asia, the Nikkei index in Tokyo fell 12.4%, the worst decline in its history. The tightening of monetary policy by the Bank of Japan and the rise in the value of the yen have increased fears of a recession in the United States, leading to a sharp decline in the Tokyo Stock Exchange. Taiwan and Seoul stocks also fell more than 8%, according to Agence France-Presse.

Mark Haefele, chief investment officer at UBS Global Wealth, said the US employment figures “suggest that the Federal Reserve may have delayed cutting interest rates for too long, threatening a recession.” To combat inflation, the Federal Reserve raised interest rates to their highest level in 20 years, in a range of 5.25% to 5.50%, to slow the US economy.

So far, analysts have seen that the US economy is strong and growing slightly with inflation slowing, which is the dream scenario represented by a “soft landing” after a period that saw acceleration in inflation due to the Covid-19 epidemic has led markets to believe that the US Federal Reserve will be able to cut key interest rates more sharply than expected in an attempt to slow the economy.

So, if the Fed begins an initial rate cut of 0.5% in September, “it will be a way of admitting” that it took too long to ease monetary policy, said analyst Stephen Innes. Concerns affected short-term bonds, and interest on long-term bonds rose.

Safe-haven currencies rise in financial markets…and Bitcoin loses 20%

Contrary to this trend, the yen is showing a rise, benefiting from its safe haven status amid fears of a recession in the United States. The Japanese currency rose 2.74% against the dollar to 142.62 yen to the dollar, and 2.1% against the euro to 156.58 yen. The Swiss franc also rose 1.26% against the dollar to $1.1774 per franc, which is also considered a safe haven.

On the other hand, the first digital currency in the world, Bitcoin, which is considered a risky asset, has decreased by about 20% since Friday night.