Volkswacht Bodensee - Stocks hammered as US data fans recession fears

Major European indices were down by an average of about 2.5 percent nearing the half-way stage.

While the losses were deemed big, they were far more modest than in Asia, where Tokyo's Nikkei tanked more than 12 percent in its worst day since the Fukushima crisis in 2011.

It also suffered its biggest ever points loss, shedding 4,451.28.

Wall Street was expected to open with big declines.

- 'Impending recession?' -

"Coming off the back of Friday's concerning US jobs report, traders are left weighing up whether to worry about a potential impending recession or simply buy-the-dip in anticipation of a sharp and swift pivot from the Federal Reserve," noted Joshua Mahony, chief market analyst at Scope Markets.

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.

The news came a day after lacklustre 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.

Expectations that the Fed could cut more aggressively than expected from September, or even be forced into an emergency reduction this month, sent the dollar sliding against the yen.

The Japanese currency was boosted also by a Bank of Japan interest-rate hike last week, analysts said.

- Bitcoin, oil retreat -

Markets tumbled across the board Monday, with Brent North Sea crude reaching the lowest level in more than six months despite heightened Middle East tensions, while bitcoin slumped more than 10 percent to under $50,000.

The dollar went under 143 yen for the first time since January.

Trading boards showed a sea of red following hefty losses Friday 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.

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.

In stocks trading Monday, Seoul and Taipei each plunged more than eight percent, Singapore gave up nearly five percent and Sydney more than three percent.

The biggest losers were tech firms, with chip titan TSMC losing nearly 10 percent in Taipei, while Seoul-listed Samsung and SK Hynix were each down more than 11 percent. Tokyo Electron nosedived 18.5 percent in Japan.

The US central bank signalled after its latest meeting on Wednesday that slowing inflation and a softening labour market meant it could cut in September, with traders predicting two or three 25-basis-point reductions before January.

Now there is speculation it will lower rates a full percentage point in that time.

"The Fed doesn't meet again until September 18. There is one more payrolls report and two (consumer price indexes) before then," pointed out Taylor Nugent at National Australia Bank.

"It's hard to imagine they could stop the Fed cutting in September, with interest instead on whether they support a 50-basis-point move and how rapid cuts will be going forward," he added.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 2.3 percent at 7,986.44 points

Paris - CAC 40: DOWN 2.3 percent at 7,086.81

Frankfurt - DAX: DOWN 2.7 percent at 17,186.58

Euro STOXX 50: DOWN 2.6 percent at 4,517.58

Tokyo - Nikkei 225: DOWN 12.4 percent at 31,458.42 (close)

Hong Kong - Hang Seng Index: DOWN 1.5 percent at 16,698.36 (close)

Shanghai - Composite: DOWN 1.5 percent at 2,860.70 (close)

New York - Dow: DOWN 1.5 percent at 39,737.26 (close)

Dollar/yen: DOWN at 142.20 yen from 146.52 yen on Friday

Euro/dollar: UP at $1.0946 from $1.0912

Pound/dollar: DOWN at $1.2758 from $1.2802

Euro/pound: UP at 85.79 pence from 85.22 pence

Brent North Sea Crude: DOWN 1.4 percent at $75.73 per barrel

West Texas Intermediate: DOWN 1.6 percent at $72.37 per barrel

R.Braegger--VB