Share market chaos explained: what’s behind the stock meltdown and will there be a recession?

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Share markets around the world saw huge falls on Monday – with Japan’s Nikkei sinking by 12% – after questions over the health of the US economy

A trader works on the floor of the New York Stock Exchange after a global sell-off of shares sparked recession fears. The Nasdaq and S&P 500 also lost ground on Monday.A trader works on the floor of the New York Stock Exchange after a global sell-off of shares sparked recession fears. The Nasdaq and S&P 500 also lost ground on Monday.

AMP chief economist Shane Oliver said “recession fears are now back with a vengeance, particularly in the US”. Even after the losses, the benchmark S&P 500 index is still up more than 9% since January, as is the Nasdaq., was down by as much as 15% at one point on Monday, before halving its losses, while bitcoin also fell sharply.Investors have been concerned about the state of the Japanese economy and the recent effects of a strengthening yen, which has unravelled the so-called “carry trade”, in which investors borrow cheaply in yen and buy higher-yielding assets including the US dollar.

Some safe haven assets, such as bonds, proved to be among the few hiding spots from the turmoil, with the sharp moves challenging all the sure bets of recent months. One “canary in the coalmine” investors look to is American online furniture and home goods company Wayfair, which warned on Thursday that customers were very cautious after recording a near 25% fall from peak spending levels recorded three years ago

 

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