During the Friday session, Europe, Asia, and New York’s share markets plunged because of increasing concerns about the declining economy of the United States, while the technological sector witnessed a disappointment as their earnings showed a negative compounding.
The United States recession and economic downturn are a matter of concern as they triggered a worldwide sell-off, and it is seen that after the Friday session`s report, this situation will intensify as the growing unemployment in the U.S. Directly or indirectly, the report indicates that the United States job market is showing a downtrend, and the growing unemployment rate is a matter of concern.
The United States economy might get weaker than the Federal Reserve’s Central Bankers have anticipated, and this is a matter of concern for the economists as it could potentially prompt the Fed to take a step regarding significant interest rate cuts during September, or before any significant boost in demand, the emergency rate cut might be helpful.
North America`s deputy chief economist, Mr. Stephen Brown, stated that during the July payroll, there was a significant decline and a notable gain in the unemployment rate, as the September interest rate cut was unavoidable. He also mentioned that this might fuel the assumption that the Fed is likely to start its loosening with a cut-in basis point of 50 or that there will be an emergency move before the next meeting.
The United States manufacturing unit is starting to weaken, as revealed by this week`s jobs report, which also intensified concerns about the declining economic growth of the US, while the shares of semiconductor manufacturer Intel have impacted negatively after the unsatisfactory outcomes.
NASDAQ, which is a tech-oriented I index, has seen a drop of around 2.4 per cent, which is a lower rate of 10 per cent compared to its record high, while on the other side, United States nonfarm payroll data revealed that around 114000 jobs were produced as of last month, which is below the expectations made by the analysts, which fall short by 175000. Meanwhile, there is an increase of 4.1 per cent to 4.3 per cent in United States unemployment rates.
The Japanese equity market has also witnessed the worst session where the market has been negatively impacted since the COVID-19 pandemic period, which was in 2020. The Nikkei 225 index has settled out at its lowest level since January at a rate of 5.8 per cent. Other indices, such as the Topix Index, Australia`s ASX, and Hang Seng of Hong Kong, have seen a combined drop of 6.1 per cent, 2.5 per cent, and 2.1 per cent, respectively.
On Friday, Europe`s primary stock indices dropped, while tech-based stocks hit a six-month low. France`s CAC 40 index declined by 1 per cent, which is lower than the November data; the Dax index of Germany dropped to 2 per cent; the shares of Dutch chipmaker ASML have seen a fall of 9.6 per cent; and ASM International dropped by 13.7 per cent. Jim Reid, who is an analyst at Dutch Bank, stated that there is a rise in an unstable market, which is directly due to United States Week data and low-tech earnings as per the predictions.
England`s FTSE 100 declined by 120 points, or 1.5 percent. This followed an uneven Thursday on Wall Street, in which the Dow fell by 1.2 per cent. The reason is weakening US manufacturing units and rising unemployment. Also, there was a decline in new orders by 3.3 per cent in June, which triggered economic concerns. But the Fed left the interest rates unchanged on Wednesday, which indicates that the rate cut is close. There is a 100 per cent chance in the market that interest rates will get cut in September and a 60 per cent chance that the points will be cut, as per weak job reports.
ING`s James Knightly stated that the present employment cost index and unit labour cost statistics should be reassured by the Fed that inflation is leading towards a rate of 2 per cent and also suggest that their primary focus should be on the job market. The United States dollar has weakened against the pound by 0.5 per cent to 1.28 US dollars and the euro by 1.2 per cent to 1.092 US dollars. Intel has also seen a drop of 28 per cent after their plan to cut more than 15,000 jobs. Amazon`s shares are also down 10 per cent because of low sales. NVIDIA`s shares have also seen a decline of 2.7 per cent as a result of the reports published by the DOJ investigation into alleged market dominance abuse. The rising concerns of the economic downtrend have led to a negative initial start to the global stock market as of August.
He also stated that the rising concerns about the economic downtrend can force the central banks to cut rates to balance it. This might be the Fed’s primary priority amid the rising disappointments in US economic data, including unexpected unemployment. Now the rate cut is not positive news, but it’s the only solution to deal with the recession. While gold futures set a record new high by increasing by 25.70 US dollars to 2506.40 US dollars per ounce.
