The looming presence of a global recession inches closer as Japan’s Nikkei sinks by 13% on Monday. Japan’s entry into the red zone alludes to a brewing recessionary undercurrent in the US, causing the Nasdaq and S&P futures to plummet by 5.5% and 3%, respectively. Investors enter a state of frenzy as the value of stocks dwindles in a matter of days.
Fresh unemployment statistics in the US seem to have aggravated delicate stocks that indicated several signs of a nosedive last week. Several analysts and investors correlate the recent stock market crash to poor job data in the US. Investor apprehensions are amplified by the Fed’s reluctance to cut interest rates. Federal Reserve Jerome Powell has hinted at reducing interest rates in September to remedy America’s unemployment crisis. According to recent data, the US unemployment rate rose by 4.3%, adding only 114,000 jobs in July.
The Nikkei crash comes as the Bank of Japan dropped rates last week, followed by the Bank of England. The US is yet to suggest any immediate remedies to Monday morning’s market crash. UAE investors are also expressing fear, as the DFM fell by 4.12% in the first 15 minutes. DFM behemoths such as Emirates NBD and Emaar fell by 4.4% and 8.4%, respectively. An analyst from the region conferred that “everything will be defined by how geopolitics shape up during this timeframe. One should follow how institutional investors are doing on their UAE and Gulf market exposures. Any major selloff will be a worry.”
Regional investment experts like Sameer Lakhani, Managing Director at Global Capital Markets, elaborated on the current global crash: “The correction in Western equity markets—and in Bitcoin and other cryptos—was long overdue. Investors can expect the UAE markets to be more resilient. And finally, the long-awaited shift in focus on earnings and dividends may be something international investors will value. We’ve had more than 25 IPOs, with another 10 or so in the pipeline. This will most likely proceed.” The UAE is expected to remain resilient, despite global disruptions.
