Wall Street’s major indexes slumped as fears of the United States sliding into recession following last week’s weak economic data rippled through global markets.
The context: Stock markets from Asia to Europe took a beating and bond yields fell as investors rushed to safe-haven assets and bet that the U.S. Federal Reserve would have to cut interest rates aggressively to stimulate growth.
The big picture: U.S. Treasury yields fell to their lowest level in a year and a closely watched spread between two- and 10-year Treasuries turned positive for the first time since July 2022, generally indicating that the U.S. economy is heading towards a slowdown.
Providing some respite, data showed U.S. services sector activity rebounded in July from a four-year low, amid rising orders and employment.
The key quote: “Markets are collapsing and it’s a sea of red across the world,” said Kyle Rodda, an analyst at capital.com.
What else to know: Australian stocks closed 3.7 per cent lower on Monday, wiping more than $100 billion from the stock market.
