Asian stocks tumble as US recession worries mount

STORY: Global stock markets are getting the jitters over a possible U.S. recession.

Asian shares tumbled on Monday morning.

Japan’s Nikkei index led the rout, falling over 7% by lunchtime in Tokyo.

The drop took it into bear-market territory.

The MSCI index of shares around the rest of the region lost over 2%.

Worries mounted at the end of last week, when U.S. employment data came in much weaker than expected.

Scharf Investments MD Eric Lynch says those numbers, and some mixed corporate earnings, have sparked a shift in sentiment:

“Investors were really complacent coming into Q2 earnings season and the Fed’s Wednesday report, and so now they’re getting scared. Why are they getting scared? They’re getting scared because oops, we were worried about inflation, now, careful what you wish for, we’re really worried about a slowing economy all of a sudden.”

Analysts at JPMorgan now put the odds of a U.S. recession at 50%.

The pessimistic outlook increasingly has investors betting on a big rate cut by the Federal Reserve in September.

That, combined with a general flight to assets seen as less risky, saw money pour into U.S. government bonds, driving yields to around 1-year lows.

Money also flowed into the Japanese yen and Swiss franc, also traditionally seen as safe havens.

Analysts say key moments this week will include earnings from industrial bellwether Caterpillar, and media giant Walt Disney.

Together they’ll offer more insight into the state of U.S. manufacturing, and the mood among consumers.