Title: Global Stock Selloff Intensifies as US Futures Tumble: Fed's Response Sparks Economic Fears
As the global stock selloff deepens, US stock futures took a hit on Monday amidst concerns that the Federal Reserve is lagging behind in supporting a slowing economy. The S&P 500 fell sharply by 3.3% after entering a technical correction, while Nasdaq contracts dropped over 2.1%. Europe's benchmark also declined by over 2.2%, marking its largest three-day drop since June 2022.
In Asia, major indexes like the Nikkei and Hang Seng plunged by over 12%, with Taiwan's benchmark seeing its worst day on record. The market rout was fueled by weakening US jobs data, concerns about elevated valuations from the AI rally, and rising tensions in the Middle East.
Bond yields dropped, with the 10-year yield hitting its lowest point in over a year, leading traders to bet on potential rate cuts by the Fed. JPMorgan economists now estimate a 50% chance of a US recession, predicting a 50bp cut at the September meeting.
Analysts from Morgan Stanley, Evercore ISI, UBS, BTIG, and Nomura have weighed in on the market rout, highlighting concerns about earnings growth, recession signals, stretched positioning, and the impact of rate cuts on stock prices.
In summary, investors should be cautious as the market faces uncertainty due to economic slowdown fears and geopolitical tensions. Understanding the potential impact of Fed rate cuts and global economic indicators is crucial for making informed investment decisions in these volatile times.