The rand experienced its steepest drop in almost two months on Monday, as recession fears in the US rattled global markets. The local currency hit an intraday low of R18.68/$, the weakest level in nearly two months, after trading near R18/$ last week. Meanwhile, the local stock market declined by over 1%. During the Federal Open Market Committee (FOMC) meeting last week, US Federal Reserve Chair Jerome Powell indicated the possibility of an interest rate cut in September, influenced by a weakening labour market.
European stocks pared initial losses but still ended Monday sharply lower, emulating a global selloff driven by concerns that major economies are struggling under the pressure of high interest rates. This was recently exacerbated by a weak US jobs market and further magnified by a strong Japanese yen. The Eurozone's STOXX 50 dropped 1.60% to 4 565, extending last week’s nearly 4.60% decline, while the pan-European STOXX 600 decreased by 2.20% to 487, adding to last week’s 2.50% decline.
The Hang Seng fell 1.50% to close at 16 698 on Monday, marking its third consecutive session of losses amid a global stock selloff and mounting fears of a potential US recession. Goldman Sachs increased the likelihood of a US economic downturn to 25%, up from its previous estimate of 15%. The Nikkei 225 Index plummeted 12.40% to finish at 31 458 points, reaching nine-month lows as investors dealt with the possibility of higher interest rates in Japan.
The S&P 500 fell by over 3%, the Dow Jones dropped 2.76%, and the Nasdaq declined by 3.40%, continuing its slide following substantial losses on Friday. Wall Street's fear gauge, the CBOE Volatility Index, rose to its highest point since October 2020. Contributing to the negative sentiment were disappointing earnings from major tech companies and increasing uncertainty in the AI sector, with Nvidia (NASDAQ:NVDA)'s shares falling 7.10% after an earlier drop of up to 15%.
In commodities, gold dropped 0.70% to $2 408 an ounce, while platinum decreased by 4.57% to $918 an ounce. Brent crude also strengthened, gaining 1.47% to $77.23 per barrel at 22h30.
