Coin Press - Stocks fall over US recession fears

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Stocks fall over US recession fears
Stocks fall over US recession fears / Photo: SPENCER PLATT - GETTY IMAGES NORTH AMERICA/AFP/File

Stocks fall over US recession fears

Global stocks closed the week on a downcast note Friday after poor US jobs data stoked recession fears while Japan's Nikkei tumbled on a resurgent yen.

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The US economy added 114,000 jobs last month, a drop from the prior month and fewer than expected, while the jobless rate rose to 4.3 percent, the highest level since October 2021.

The report added to recession fears following lackluster manufacturing data on Thursday, pushing major US indices into the red for the entire day after a down session in Europe.

"Historically it's very difficult to achieve a soft landing," said Steve Sosnick of Interactive Brokers. "It's easy for a soft landing to sneak up on you and become a hard landing. And that's what the market is very much afraid of right now."

The Dow Jones Industrial Average finished at 39,737.26, down 1.5 percent for the day and 2.1 percent for the week.

"And just like that, the market is worried about the US economy suffering a hard landing," said Briefing.com analyst Patrick O'Hare.

"A sober market didn't need any more cold water poured on it, but that is exactly what it got with the July employment report, which was filled with ample headline disappointment," he said.

But Art Hogan of B. Riley Wealth said the market is likely overreacting to a few weak data points, noting that most of the corporate earnings released in the last few weeks have been solid.

Earlier, European stock markets closed sharply in the red: Amsterdam retreated by more than three percent, Frankfurt 2.3 percent, Paris 1.6 percent and London 1.3 percent.

- Tokyo tanks -

In Asia, where markets closed before the latest US jobs data, Tokyo led losses.

The Nikkei 225 tanked 5.8 percent -- its biggest drop since the start of the coronavirus pandemic four years ago -- owing to a stronger yen, which hits Japan's key export sector.

Hong Kong and Sydney were off more than two percent, Seoul gave up more than three percent and Taipei shed more than four percent, with losses also in Shanghai, Mumbai and Singapore.

Wednesday's decision by the Bank of Japan to hike interest rates for the second time in 17 years -- and talk of another to come -- strengthened the yen to its best level since March.

The dollar also weakened against the pound and the euro as traders bet the weaker US jobs data would translate into Federal Reserve interest rate cuts.

"The situation now shifts from 'if' the Fed will cut to 'by how much' will they cut," said Bret Kenwell, US investment analyst at trading platform eToro.

"The labor market is the lifeblood to the US economy and the Fed needs to ensure that they don't risk weakening it too much solely in an effort to bring down inflation," he said.

- Key figures around 2050 GMT -

New York - Dow: DOWN 1.5 percent at 39,737.26 (close)

New York - S&P 500: DOWN 1.8 percent at 5,346.56 (close)

New York - Nasdaq Composite: DOWN 2.4 percent at 16,776.16 (close)

London - FTSE 100: DOWN 1.3 percent at 8,174.71 (close)

Paris - CAC 40: DOWN 1.6 percent at 7,251.80 (close)

Frankfurt - DAX: DOWN 2.3 percent at 17,661.22 (close)

Euro STOXX 50: DOWN 2.7 percent at 4,638.70 (close)

Tokyo - Nikkei 225: DOWN 5.8 percent at 35,909.70 (close)

Hong Kong - Hang Seng Index: DOWN 2.1 percent at 16,945.51 (close)

Shanghai - Composite: DOWN 0.9 percent at 2,905.34 (close)

Dollar/yen: DOWN at 146.52 yen from 149.36 yen on Thursday

Euro/dollar: UP at $1.0912 from $1.0791

Pound/dollar: UP at $1.2802 from $1.2739

Euro/pound: UP at 85.22 pence from 84.70 pence

West Texas Intermediate: DOWN 3.7 percent at $73.52 per barrel

Brent North Sea Crude: DOWN 3.4 percent at $76.81 per barrel

burs-jmb/sst

J.Bondarev--CPN