Recession Fears Rock Asian Markets Amid Anticipated Fed Rate Cuts

Asian markets plummeted on Monday due to fears of a U.S. recession, prompting speculation that the Federal Reserve will need to slash interest rates rapidly. This triggered a decrease in Nasdaq and S&P 500 futures. Analysts predict significant rate cuts by the Fed in the coming months.

Major share markets in Asia plunged on Monday amid fears of an impending U.S. recession, causing widespread risk aversion among investors. Nasdaq futures dropped 1.64%, while S&P 500 futures fell 1.04%, following a similar trend from last Friday.

MSCI's broadest index of Asia-Pacific shares outside Japan declined by 0.8%, and Japan's Nikkei fell 6.4%, reaching seven-month lows. Meanwhile, treasury bonds saw increased demand, with 10-year yields dropping to 3.77%, their lowest since mid-2023. The concerning July payroll report has led markets to speculate a near 70% chance that the Federal Reserve will cut rates in September, potentially by 50 basis points.

Goldman Sachs analysts raised their 12-month recession odds to 25% but anticipate quarter-point cuts in September, November, and December if job growth recovers. JPMorgan analysts were more pessimistic, assigning a 50% probability to a U.S. recession and predicting 50 basis point cuts in both September and November.

(With inputs from agencies.)