Stock markets in Europe, Asia and New York tumbled on Friday as fears of a US economic slump grew and technology shares were hit by underwhelming earnings.
Concerns that the US could be sliding towards a recession spurred a global sell-off, which accelerated after a poor employment report on Friday showed that the US jobs market was cooling fast, pushing up the unemployment rate.
Economists fear the US economy could be weaker than central bankers at the Federal Reserve had realised, and could force the Fed into a sharp cut in borrowing costs in September – or even an emergency rate cut before that – to stimulate demand.
“The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable and will increase speculation that the Fed will kick off its loosening cycle with a 50bp cut or even an intra-meeting move,” said Stephen Brown, deputy chief North America economist at Capital Economics.
The weak jobs report added to anxiety after data this week showed weakness in the US manufacturing sector, and disappointing results from semiconductor maker Intel, which hammered its shares.
The tech-focused Nasdaq index lost 2.4% to finish in correction territory – 10% off its record high – after the latest US non-farm payroll report showed that only 114,000 jobs were created last month, compared with the 175,000 analysts expected. In another blow, the US unemployment rate rose from 4.1% to 4.3%.
Japanese equities…
