Stock Markets Plummet Amid Recession Fears

Global stock markets experienced significant losses, driven by fears of a potential U.S. recession. Japanese shares faced historic drops, and European stocks also declined. Investors moved towards safe havens like the yen and Swiss franc. Goldman Sachs and JPMorgan analysts predict rate cuts by the Federal Reserve to combat recession risks.

Stock markets tumbled on Monday, with Japanese shares at one point exceeding their 1987 'Black Monday' loss, as fears of a U.S. recession sent investors fleeing from risk while wagering that rate cuts would be needed to rescue growth. The safe-haven yen and Swiss franc surged, sparking speculation that some investors were unloading profitable trades to cover losses elsewhere. Circuit breakers were triggered on stock exchanges across Asia due to the torrent of selling.

Japan's benchmark Nikkei average closed 12.40% lower at 31,458.42, marking its largest one-day fall since October 1987, while the broader Topix lost 12.48% to 2,220.91. European stocks opened lower, with France's CAC 40 down 2.1%, Spain's IBEX down 2.8%, and the UK's FTSE 100 off 1.7%, all due to fears of a global recession following weak U.S. data.

Treasury bonds were in high demand, with U.S. 10-year yields hitting 3.723%, the lowest since mid-2023. A weak July payrolls report on Friday saw markets anticipate rate cuts from the Federal Reserve. Goldman Sachs analysts now predict 25 basis point cuts in September, November, and December. More bearish, JPMorgan analysts assign a 50% probability to a U.S. recession and expect further rate cuts this year.

(With inputs from agencies.)