Asian markets tank over US recession fears, Indian indices fare better

New Delhi : A disappointing job scenario in the US coupled with the fear of a reverse Yen carry trade, following an interest rate hike in Japan, led Asian markets to crash on Monday.

However, the Indian benchmark indices showed resilience compared to its peers, down around 2.5 per cent.

Japan’s benchmark Nikkei 225 stock index nosedived nearly 13 per cent amid worries over the state of the US economy.

South Korean stocks tumbled by the most on record to a near nine-month low amid intensifying fears over a US economic slowdown. The Korean won fell against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) plummeted a record 234.64 points, or 8.77 per cent, to close at 2,441.55, after dipping to as low as 2,273.97 at one point, following a 3.65 per cent loss the previous session, according to Yonhap news agency.

Heavy selling pressure was seen in all major Asian markets. Taipei fell by 4.43 per cent, Jakarta was down nearly 2 per cent, Hong Kong and Shanghai were down 1.43 per cent and 0.83 per cent), respectively.

The financial markets reacted to a report which showed that hiring by US employers slowed last month.

According to market analysts, equity markets are reacting to economic weakness, highlighted by disappointing earnings from a few US consumer-focused companies.

“It's crucial to monitor these developments closely in the coming months,” said Trideep Bhattacharya, President and CIO-Equities, Edelweiss MF.

The VIX, an index that measures how worried investors are, fell about 20 per cent. The world’s largest cryptocurrency Bitcoin went down almost 14 per cent to $54,155.

Yeap Jun Rong of IG said that investors will be watching for data on the services sector from the US Institute for Supply Management.

Abhishek Banerjee, smallcase Manager and Founder at Lotusdew, said that bad job reports and impending conflict in the Middle East are all contributing to risk off today.

“However, indicators like oil price volatility, US yields and unfilled positions indicate the opposite. I think today is one of the buy-on-dip days for a long-term investor,” he added.

Santosh Meena, Head of Research, Swastika Investmart said that the global market is reeling as bears enter with a cocktail of bad news.

“The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the USA after extremely poor job data, which spooked market sentiment,” he added.

The rally in the global stock markets has been driven mainly by consensus expectations of a soft landing for the US economy.

This expectation is now under threat with the fall in the US job creation in July and the sharp rise in the US unemployment rate to 4.3 per cent, said experts.