European and Asian stock markets tumble on fears of US recession

Stocks across Europe and Asia fell sharply on Monday, as investors fear that the US Federal Reserve has waited too long to cut interest rates and the world's largest economy is heading for a recession.

The Federal Reserve left interest rates unchanged at its latest meeting last week. They are unlikely to lower borrowing costs to support the economy until September. But on Friday, it was revealed that US job growth slowed sharply in July.

That has led investors to believe that the Federal Reserve waited too long to cut interest rates. Resulting concerns about a cooling of the economy and the US labour market have sent markets tumbling across the world.

Japanese market crashes

European stock markets were all lower on Monday. European stocks fell to near six-month lows. The STOXX Europe 600 was down almost 3 per cent on Monday. The Bel20, Belgium's benchmark stock market index, was down more than 3.3 per cent at the open.

Asian markets, which are the first to open due to time zone differences, also fell. Japan's Nikkei closed down more than 12 per cent, suffering its biggest fall since the country's stock market crash in 1987 and hitting its lowest level in seven months.

When and if the US will enter a recession remains to be seen. Analysts at Goldman Sachs put the odds at 25 per cent, while JP Morgan sees a 50 per cent chance of a US recession.

^{© PHOTO KYODO / MAXPPP}