More heavy selling ripped through global financial markets today as the FTSE 100 index lost 2% and Japan’s Nikkei 225 suffered its biggest one-day slide since 1987. The reverse in London followed Friday’s poor jobs figures in the US, which appeared to fuel doubts about a soft landing for the world’s largest economy.
Tokyo’s stock market was also impacted by the country’s interest rate outlook as yen-linked losses for big multinationals left the Nikkei 225 down by 12.4%. Traders expect a fresh wave of selling on Wall Street later after the Nasdaq Composite closed 2.4% lower and the S&P 500 index lost 1.8% on Friday.
Poorly-received results impacted the tech sector before the weekend, leaving Amazon shares down 9% and Intel off 26%.
The risk averse mood also impacted the cryptocurrency market as Bitcoin slumped by 10% to $52,729.
In London, the FTSE 100 index lost 200 points to trade below 8000 for the first time since April and the UK-focused FTSE 250 index reversed by 3%.
Dannii Hewson, AJ Bell’s head of financial analysis, said: “Friday’s brutal sell off has continued into the new week as investors mull the prospect that the much-touted US soft landing looks like being a whole lot bumpier than markets had hoped.
“Circuit breakers have been firing on Asian markets as stocks tumbled, with investors scurrying to price the impact a stalling US economy is likely to have.”
Big fallers in the FTSE 100 included mining heavyweight Glencore, which reversed 5%. The tech sector backer Scottish Mortgage Investment Trust also lost 4%.
Meanwhile, the financial markets uncertainty was cited alongside geopolitical risk for the collapse of a potential £1.6 billion takeover in the FTSE 250 index.
Energy and materials-focused consulting and projects firm Wood Group had been in the sights of the Dubai-based engineering company Sidara. Wood’s shares fell 38%.
Recession fears were fuelled on Friday after US payroll growth of 114,000 came in short of Wall Street’s 175,000 forecast and June figures were revised lower.
The unemployment rate also hit a three-year peak of 4.3%, above the 4.1% expected although the figure may have been distorted by hurricane disruption.
The figures prompted a sharp surge in bets on Federal Reserve interest rate cuts, with markets now seeing a 200 basis points reduction over the next 12 months.
Deutsche Bank strategist Jim Reid said: "Markets were on edge before Friday but a weak payrolls figure has really escalated a profound move across the globe.”
