On Monday, August 5, the Asian stock markets were significantly falling, while bonds rose against the background of growing fears about possible recession in the United States. Investors began to get out of risky assets, expecting that the Federal Reserve would be forced to quickly reduce interest rates to maintain economic growth, Reuters reports.
Japanese Ena and the Swiss Frank have strengthened significantly as investors tried to avoid risks. On some exchanges in Asia, automatic switches have been activated due to sales growth.
NASDAQ futures fell by 2.9%, and futures on the S&P 500 decreased by 1.6%. European markets were also injured: Futures on the Eurostoxx 50 fell by 0.8%, and on the British FTSE - by 0.5%.
The Nikkei Japanese Index lost 8.0%, reaching the seven -month minimum, which has become the largest fall in three sessions since the 2011 financial crisis. The Widespread Index of the Asian-Pacific Region of Japan has lost 2.8%outside Japan. However, Chinese "blue chips" increased by 0.2%. The yield of Japanese 10-year bonds has decreased by 17 base points to 0.785%, which is the lowest since April, as the markets have gained their expectations to further increase the rate of Japan bank.
The US Treasury bonds were in demand, and the yield of 10-year bonds fell to 3.723%, the lowest level from the middle of 2023.
The reason for the concern of investors was the weak July report on employment in the United States, which pushed the markets to expect a significant reduction in rates with the Federal Reserve in September - by 50 base points. Analysts provide a reduction in the rate by 115 base points to 5.25-5.5% this year and up to 3% by the end of 2025. Goldman Sachs analysts have increased the probability of recession over the next 12 months to 25%, while JPMorgan analysts estimate this probability at 50%.
The huge decline in treasury bonds has reduced the attractiveness of the US dollar as a goal currency, which led to its reduction by 1% on August 2. On Monday, the dollar fell by 2.2% against Japanese yen, up to 143.10. The euro remained at the level of $ 1.0934, and the Swiss franc strengthened to the six -month maximum, with the dollar fell by 1% to 0.8495 franc.
