Markets in correction: recession coming?
Financial markets/economy
Posted by MoneyController on 05.08.2024
- 309
- 0 Follow me
Uninspiring economic data and falling stock markets: what is happening in financial markets these days?
The Nikkei's opening today (Monday, August 5) signals a continuation of selling in the markets, after a week, last week, that had closed with significant declines. So much so that some analysts say we have entered a bear correction phase of the markets. Last week in the United States, labor market data pushed down stock market indexes further. So that, as Pia Singh and Hakyung Kim write on "CNBC," this decline in the markets can be interpreted as investors' fear that the U.S. economy is in danger of heading into a recession.
As Vito Lops points out in "Il Sole 24 Ore," the largest seven U.S. stocks in the technology segment (Amazon, Apple, Google, Meta, Microsoft, Nvidia and Tesla) have suffered corrections in the markets amounting to $3.3 trillion; the reason lies in the lowered outlook on earnings related to artificial intelligence. As for Europe, on the other hand, Lops continued, the stock market declines were mainly attributable to the banking sector, which seems not to have welcomed the recent interest rate cut by the European Central Bank.
But what is the economic situation in the U.S. and Europe? In addition to the less than encouraging data on the labor market, the index compiled by the Institute for Supply Management, which indicates the mood of purchasing and procurement workers in companies, marked a contraction above expectations; in particular, the index fell below 50 percent, a threshold indicating that expectations now are for a contraction rather than growth.
In "Il Corriere della Sera," Daniele Manca outlines an economic situation characterized by the non-negligible difficulties of some major economic giants: not only the U.S., which risks recession, but also China and Germany are showing signs of retreat. Economies such as Italy seem to be sheltered from recession for the time being, but only because of tourism-related revenues, since industry, on the other hand, is registering a slowdown. In general, Manca points out, in a situation like the current one, marked by uncertainties related to the economic trajectory, operators tend to shy away from risk, seeking liquidity instead.
Read also:
Is the European economy and markets in danger of slowing down?
The next moves for the Fed and the consequences for the US stock market