Recession Fears Shake Global Markets: Investors Brace for Rate Cuts

Asian markets plunged on Monday as recession fears in the U.S. spurred mass risk aversion. Major indices dropped, Treasury yields hit lows, and a weak July payroll report increased the likelihood of rate cuts. Investors are closely monitoring economic indicators for recovery signals.

Major share indices in Asia plunged deep into the red on Monday, stoked by fears that the United States might be teetering on the brink of a recession. The market sentiment triggered mass risk aversion and led to widespread speculation that interest rates will need to be slashed sharply and swiftly to support economic growth.

Investors ended the day where they left off on Friday, with Nasdaq futures tumbling 1.28% and S&P 500 futures falling 0.79%. Meanwhile, Nikkei futures were trading at 34,665, a significant drop from the cash close of 35,909.

The sharp movements followed a notable rally in Treasury futures on Friday, leading yields to plunge 18 basis points to their lowest levels since November. The weak July payrolls report intensified the recession concerns, with markets pricing in a near 70% chance that the Federal Reserve will cut rates in September. Further rate cuts are expected throughout the year.

(With inputs from agencies.)