Singapore Stocks Sell-off Worsen as Markets Fret over US Recession and Tech Stock Crash

From Japan to Singapore, stock indexes in Asia Pacific were swimming in a sea of red on Monday, after dismal unemployment data in the United States triggered recession worries last Friday.

In Singapore, the Straits Times Index was down 4.8 per cent in afternoon trading, extending morning’s losses.

Local banks led the losses in value terms, with DBS Bank down 7%, while UOB lost 6.4% and OCBC Bank fell 5.7%.

In terms of other stocks, SIA fell 3.3%; Singtel fell 2.4%; Seatrium fell 3.4%; Sats and Yangzijiang Shipbuilding fell 7%; NIO and Keppel fell 3.9%; Genting Singapore fell 4.8%; while SGX rose 0.1%.

Stock markets tumbled on Monday and Japanese shares plummeted a gut-wrenching 13% as fears the United States could be heading for recession sent investors rushing from risk while wagering that rapid fire rate cuts will be needed to rescue growth.

South Korean shares fell for a second straight session on Monday, with trading curbs activated for the first time in four years, as risk appetite dampened across global financial markets on U.S. recession fears.

The market rout underscores how quickly sentiment has shifted away from expectations that the Federal Reserve will be able to engineer a soft-landing for the US economy.

Data on Aug 2 showed that US non-farm payrolls recorded one of the weakest prints since the Covid-19 pandemic and the jobless rate unexpectedly climbed for a fourth month to 4.3 per cent, above the Fed’s year-end forecast, triggering a closely watched recession indicator.

Goldman Sachs Group economists increased the probability of a recession in the US over the next 12 months to 25 per cent from 15 per cent but said there were several reasons not to fear a slump, even after US unemployment jumped.

But analysts at JPMorgan were more bearish, subscribing a 50 per cent probability to a US recession.

Traders are projecting the Fed will cut rates by more than a full percentage point in 2024, with an increased chance of an outsized 50 basis-point cut in September, according to data compiled by Bloomberg.