Shares around the world tumbled on Friday as investors panicked over signs of weakness in the U.S. economy. Japan’s benchmark Nikkei 225 dropped 5.8 percent overnight, its second-largest point drop in history.
On Friday morning, the US unemployment rate rose to 4.3%, the highest since October 2021, indicating economic struggle. This caused pre-market trading drops for the S&P 500, Nasdaq, and Dow Jones after their previous decline.
Stock markets in Europe took a hit, with the pan-European Stoxx 600 index dropping 1.7 percent to a three-month low. Germany’s DAX lost 1.5 percent, while the CAC 40 slipped 1 percent. In London, the FTSE 100 fell 0.6 percent.
Stocks declined following weak manufacturing data, raising concerns about delayed interest rate cuts by the Federal Reserve and the risk of a recession. Fed Chair Jerome Powell indicated a possible rate cut in September. Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Asset Management, expressed surprise at the extent of the stock fall, attributing it to worries about a potential major downturn in the US economy, especially concerning for Japanese stocks.
“José Torres, a senior economist at Interactive Brokers, stated that initial relief over a potential September rate cut has turned to concern as investors worry about the delay in central bank action. Additionally, Intel’s shares dropped nearly 19 percent in aftermarket trading.”
The chipmaker is cutting 15% of its workforce, about 15,000 jobs, to better compete with rivals like Nvidia and AMD. Japan’s market has retreated to January levels after reaching an all-time high of over 42,000 last month, with the Nikkei losing 6.2% in the past three months.
Japanese stocks tumbled as the central bank raised its benchmark interest rate to 0.25 percent from 0.1 percent. This strengthened the Japanese yen against the US dollar, potentially impacting the earnings of major manufacturers and tourism. In Hong Kong, the Hang Seng fell by 2.1 percent to 16,945.51, while the Shanghai Composite index dropped by 0.9 percent to 2,905.34.
Chinese shares fell this week as investors were disappointed with the government’s efforts to spur growth. The Kospi in Seoul dropped 3.7 percent to 2,676.19, and Taiwan’s Taiex sank 4.4 percent. Both markets are sensitive to weakness in technology shares.
In other parts of Asia, Australia’s S&P/ASX plunged by 2.1 percent to 7,943.20, while the Sensex in India declined by 1.1 percent. Additionally, Bangkok’s SET dropped by 0.7 percent.
On Thursday, other reports revealed that the number of US workers applying for jobless benefits reached its highest level in about a year. Additionally, productivity for US workers improved in the spring. These data are expected to alleviate pressure on inflation and provide the Fed with greater flexibility to cut rates.
According to Philip Marey of Rabobank, employment growth is slowing more than expected, showing the effectiveness of the Fed’s strategy. However, this approach carries the risk of halting employment growth and causing a recession.
Proverbs 22:7 The rich ruleth over the poor, and the borrower is servant to the lender.
1 Timothy 6:10 For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.
Hebrews 13:5 Let your conversation be without covetousness; and be content with such things as ye have: for he hath said, I will never leave thee, nor forsake thee.
Matthew 6:19 Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal:
Matthew 6:20 But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal:
Matthew 6:21 For where your treasure is, there will your heart be also.
Matthew 6:24 No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and money.
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