Berliner Boersenzeitung - Stocks sink over US recession fears

Wall Street deepened losses from the previous day, with the tech-heavy Nasdaq briefly dropping by as much as three percent in late morning deals while chip-maker Intel nosedived more than 25 percent after announcing job cuts.

European stock markets closed sharply in the red: Amsterdam retreated by more than three percent, Frankfurt 2.3 percent, Paris 1.6 percent and London 1.3 percent.

The Tokyo stock market finished almost six percent lower due to a stronger yen and the prospect of interest rate hikes in Japan.

The dollar weakened against other major currencies and oil prices fell more than three percent.

While a weaker labour market raises the chances the US Federal Reserve will cut interest rates in September, it follows other data this week that fuelled concerns about the health of the world's biggest economy.

"And just like that, the market is worried about the US economy suffering a hard landing," said Briefing.com analyst Patrick O'Hare.

"A sober market didn't need any more cold water poured on it, but that is exactly what it got with the July employment report, which was filled with ample headline disappointment," he said.

The Fed held its key lending rate at a 23-year high on Wednesday but chairman Jerome Powell indicated that it could make its first cut as soon as September.

The Fed has for months been looking for confirmation that inflation is well on the way down and that the labour market is softening before cutting rates.

It has largely been confident it could achieve a "soft landing" -- slowing the economy down without tipping it into recession.

"The situation now shifts from 'if' the Fed will cut to 'by how much' will they cut," said Bret Kenwell, US investment analyst at trading platform eToro.

"The labour market is the lifeblood to the US economy and the Fed needs to ensure that they don't risk weakening it too much solely in an effort to bring down inflation," he said.

The United States added 114,000 jobs last month, down from June's revised figure of 179,000, while the unemployment rate rose to 4.3 percent, according to government figures.

It followed news on Thursday that the US factory sector shrunk faster than forecast in July -- and for the fourth consecutive month.

That came as another report showed the private sector created far fewer jobs than expected in July and many fewer than in June.

Investors are also dealing with a disappointing earnings season from Big Tech, a key driver of the global rally that has helped push many markets to multiple record highs this year.

Shares in US chip titan Intel sank after it announced it would slash more than 15 percent of its workforce -- about 18,000 jobs -- as it streamlines operations. The firm reported a loss of $1.6 billion in the recently ended quarter.

- Tokyo tanks -

In Asia, where markets closed before the latest US jobs data, Tokyo led losses.

The Nikkei 225 tanked 5.8 percent -- its biggest drop since the start of the pandemic four years ago -- owing to a stronger yen, which hits Japan's key export sector.

Hong Kong and Sydney were off more than two percent, Seoul gave up more than three percent and Taipei shed more than four percent, with losses also in Shanghai, Mumbai, Singapore.

Wednesday's decision by the Bank of Japan to hike interest rates for the second time in 17 years -- and talk of another to come -- strengthened the yen to its best level since March.

The dollar also weakened against the pound and the euro.

- Key figures around 1740 GMT -

New York - Dow: DOWN 2.3 percent at 39,431.49 points

New York - S&P 500: DOWN 2.2 percent at 5,325.65

New York - Nasdaq Composite: DOWN 2.4 percent at 16,780.30

London - FTSE 100: DOWN 1.3 percent at 8,174.71 (close)

Paris - CAC 40: DOWN 1.6 percent at 7,251.80 (close)

Frankfurt - DAX: DOWN 2.3 percent at 17,661.22 (close)

Euro STOXX 50: DOWN 2.7 percent at 4,638.70 (close)

Tokyo - Nikkei 225: DOWN 5.8 percent at 35,909.70 (close)

Hong Kong - Hang Seng Index: DOWN 2.1 percent at 16,945.51 (close)

Shanghai - Composite: DOWN 0.9 percent at 2,905.34 (close)

Dollar/yen: DOWN at 146.72 yen from 149.66 yen on Thursday

Euro/dollar: UP at $1.0923 from $1.0750

Pound/dollar: UP at $1.2803 from $1.2735

Euro/pound: UP at 85.31 pence from 84.71 pence

West Texas Intermediate: DOWN 3.8 percent at $73.38 per barrel

Brent North Sea Crude: DOWN 3.5 percent at $76.77 per barrel

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(U.Gruber--BBZ)