Stocks tumble worldwide amid US recession fears, tech concerns

Stocks tumbled worldwide on Monday amid fears that the US economy could fall into recession.

Stock markets from Tokyo to Frankfurt and New York were down after weak US labour market data on Friday left global investors spooked, although experts said the volatility was likely a market correction, rather than a crash.

Japan’s Nikkei 225 index dropped more than 12% on Monday, leaving it more than 20% down from the record high it saw in July, while Germany’s leading index, the DAX, had fallen around 3% by mid-morning.

The eurozone’s EURO STOXX 50 suffered similar losses, while on Wall Street, the Dow Jones was down almost 3% in early trading, with the Nasdaq-100 falling by more than 4%.

Amid the chaos, the CBOE Volatility Index in New York, which measures the intensity of stock market fluctuations, reached levels not seen since the early months of the coronavirus pandemic in 2020.

US investors are concerned that the Federal Reserve has waited too long before cutting interest rates, leaving the country at risk of recession, while escalating tensions in the Middle East are further contributing to the pessimistic mood.

Technology stocks also suffered on Monday following poor second-quarter performances from tech giants, with some observers suggesting that hype surrounding artificial intelligence (AI) could have left some companies overvalued.

A report that chip manufacturer Nvidia is postponing the launch of new AI chips due to design flaws caused particular concern.