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.
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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.)