Prices of stocks and other risky assets plunged on Monday as a market sell-off that began last week accelerated. Hopes that markets were recovering some poise in afternoon trading in the United States were dashed with a late slump in the hour before markets closed.
Japanese and other Asian markets led Monday’s sharp declines, with cryptocurrencies, oil and European stock markets joining them. US markets then opened sharply lower.
The main catalyst appeared to be concern that the US Federal Reserve has been too slow to respond to a weakening economy.
Meeting last week, the Fed decided again to hold interest rates steady, although it did indicate a first cut was likely at its September meeting. Jobs data that came out the day after that decision showed jobs growth easing more sharply than had been expected in July, triggering fears of a looming recession as the US heads for the polls.
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Republicans including Donald Trump seized on the market moves to attack the Biden administration and Kamala Harris, the Democratic presidential nominee.
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“Voters have a choice – Trump prosperity or the Kamala Crash and Great Depression of 2024,” the former president wrote on Truth Social, his social media platform, in capital letters on Monday morning.
Economic data showing the vast US services sector beat expectations and entered expansionary territory in July, up from a four-year low the previous month, cheered markets initially in the afternoon, with US and European markets regaining some of the morning losses. That allowed European markets to close in reasonably upbeat mood.
“Today was a reminder that this is not an economy that is collapsing,” said Daniel Ivascyn, chief investment officer at Pimco, said after the release of the data.
[ Wall Street joins in market rout with volatility at four-year highOpens in new window ]
However, on Wall Street, that recovery stalled in the final hour of trading.
Tech stocks were among those badly hit, with AI chipmaker Nvidia 6.4 per cent weaker and Microsoft, Apple, Tesla and Google parent, Alphabet, all losing between 3.3 per cent and 4.8 per cent of their value.
The S&P 500 finished the session with a loss of 3 per cent. It had been down as much as 4.3 per cent during the morning, but had trimmed its decline to about 1.8 per cent by lunchtime. The blue-chip Dow Jones Industrial Average was 2.6 per cent off. The Nasdaq Composite, which had tumbled 6.3 per cent shortly after the market opened, ended the day 3.4 per cent weaker.
The price of Bitcoin dropped 10 per cent, bringing the world’s most popular cryptocurrency down to $54,000 (€49,280), its lowest level since February, after recovering from dipping below $50,000 earlier.
The price of Ethereum, the second-most traded token, plunged 15 per cent on Monday to $2,400. – Additional reporting The Financial Times Limited 2024/Reuters
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