Europe open: Stocks sharply lower as global selloff continues

5th Aug 2024 08:01

(Sharecast News) - European shares were sharply lower again as markets opened on Monday after last week's US manufacturing and payrolls data reignited recession fears and sparked a global selloff.

As of 0815 BST, the pan-regional Stoxx 600 index was down 2.73% in early deals at 497.85, while the DAX was down 2.33% at 17,661.22 and the CAC 40 came out the gate 1.61% weaker at 7,251.80.

Global markets were in the red early on Monday as investors grew concerned that the US Federal Reserve may be too slow in loosening monetary policy if it wants to avoid an economic recession. This sent all three major US indices lower on Friday, with the tech-heavy Nasdaq Composite dropping into correction territory for the year, while Japan's Nikkei slumped roughly 12% in its worst showing in more than 35 years.

"Markets are in absolute turmoil this morning thanks to the Nikkei 225's biggest one-day drop since 1987, which has wiped out the index's gains for the year. Volatility as measured by the Vix is at a two-year high, as the index earns its moniker of 'the Fear Index'," said IG's Chris Beauchamp.

"Futures point to a torrid time for European and US markets too - the FTSE 100 is expected to open down 1% and the Dax by 2%, but it is on Wall Street where a fresh wave of selling is on the cards. Investors continue to flee tech stocks, and the Nasdaq 100 is expected to open down 1000 points lower from Friday's close, a loss of over 5%. This is a perfect demonstration of what happens when everyone tries to sell at once. Such moves don't stop in a single day and we likely have a summer of volatility ahead of us, particularly as we await developments in the Middle East."

Also of note, the VStoxx volatility gauge surged 35.32% to 24.52, while the ten-year German government bond yield declined by roughly six basis points to 2.118%, and the euro/dollar sat just above $1.09.

In corporate news, Uniper, Infineon and Monte dei Pasci will all report earnings on Monday.

On the macro front, monthly purchasing managers index numbers from both Italy and Spain will be published on Monday.

Reporting by Iain Gilbert at Sharecast.com