Stocks hammered by US recession fears

HONG KONG — Tokyo led a collapse across Asian and European equities Monday, after weak US jobs data fanned fears of a recession in the world's top economy and boosted bets on several Federal Reserve interest rate cuts.

Trading boards showed a sea of red following another hefty day of losses on Wall Street, where heavyweight tech firms, including Amazon and Microsoft, took the brunt over worries an AI-fuelled rally this year may have been overdone.

A much-anticipated report Friday showed the US economy added just 114,000 jobs last month, well down from June and far fewer than expected, while the jobless rate rose to the highest level since October 2021.

A man cycles past a display showing closing numbers after record losses on the Tokyo Stock Exchange, along with the yen-dollar rate, along a street in Tokyo on Aug. 5, 2024. AFP PHOTO

The news came a day after lackluster factory data that stoked concerns that Fed officials may have held borrowing costs at more than two-decade highs too long.

That has led to speculation the economy could be in for a hard landing and tip into recession.

Some analysts pointed to the «Sahm rule,» which says an economy is in the early stages of recession if the three-month moving average of unemployment is 0.5 percentage points above its low over the previous 12 months. That was triggered by Friday's data.

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The losses in New York were followed in Asia, with Tokyo's Nikkei tanking more than 12 percent on its worst day since the Fukushima crisis in 2011. It also suffered its biggest points loss, shedding 4,451.28.

Seoul and Taipei plunged more than 8 percent each, while Singapore gave up nearly 5 percent and Sydney more than 3 percent.

Futures trading was temporarily suspended on the Nikkei and Topix indexes, on the Osaka Exchange and in Seoul in a bid to ease volatility.

Hong Kong and Shanghai lost more than 1 percent, with traders brushing off a set of directives released by China aimed at boosting household consumption in the world's number two economy.

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There were also big losses in Mumbai, Bangkok, Manila, Jakarta and Wellington.

London, Frankfurt and Paris each fell more than 2 percent.

The biggest losers were