US recession fears spark fresh stock market route

The global stock market rout accelerated today after Japan’s Nikkei 225 hardened its worst session since 1987 and the FTSE 100 index slumped 2%. The selling followed Friday’s poor jobs figures in the US, which appeared to dash hopes of a soft landing for the world’s largest economy.

Tokyo’s stock market was also impacted by sharp currency moves as heavy losses for the country’s multinationals left the Nikkei 225 down by 12.5%. Traders expect a fresh wave of selling on Wall Street later after the Nasdaq Composite closed 2.4% lower and the S&P 500 index lost 1.8% on Friday.

Poorly-received results impacted the tech sector before the weekend, leaving Amazon shares down 9% and Intel off 26%.

The risk averse mood also swept through the cryptocurrency market as Bitcoin slumped by 10% to $52,729.

In London, the FTSE 100 index lost 200 points to trade below 8000 for the first time since April and the UK-focused FTSE 250 index reversed by 3%.

IG’s chief market analyst Chris Beauchamp said: “This is a perfect demonstration of what happens when everyone tries to sell at once.

“Such moves don’t stop in a single day and we likely have a summer of volatility ahead of us, particularly as we await developments in the Middle East.”

Big fallers in the FTSE 100 included the tech sector backers Pershing Square Holdings and Scottish Mortgage Investment Trust after their shares fell 8%. Baillie Gifford Japan Trust reversed 7% in the FTSE 250.

Recession fears were fueled on Friday after US payroll growth of 114,000 came in short of Wall Street’s 175,000 forecast and June figures were revised lower.

The unemployment rate also hit a three-year peak of 4.3%, above the 4.1% expected although the figure may have been distorted by hurricane disruption.

The figures prompted a sharp surge in bets on Federal Reserve interest rate cuts, with markets now seeing a 200 basis points reduction over the next 12 months.

Deutsche Bank strategist Jim Reid said: “Markets were on edge before Friday but a weak payrolls figure has really escalated a profound move across the globe.”