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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy-820x461.jpeg" alt="" class="wp-image-516437" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A bank employee count China’s renminbi (RMB) or yuan notes next to U.S. dollar notes at a Kasikornbank in Bangkok, Thailand, January 26, 2023. Athit Perawongmetha | Reuters</figcaption></figure>



BEIJING — Chinese companies seeking growth from exports face a new challenge: a strengthening yuan.



The “offshore” yuan traded in Hong Kong surged Monday against the U.S. dollar to its strongest level for 2024 — below 7.1 — before weakening slightly to around 7.18 as of Wednesday afternoon, according to Wind Information.



The sharp moves came amid a global stock market sell-off as investors reassessed their outlook for the U.S. economy and potential interest rate cuts. High rates have bolstered the U.S. dollar and related assets.



A strong greenback has also helped keep the Chinese yuan weak, which in turn kept Chinese exports competitively priced abroad. After steadily weakening in the first half of the year, the offshore yuan has strengthened against the U.S. dollar over the last month.



Many trade companies, especially smaller ones, have “currently adopted a strategy of ‘preferring not to take orders rather than take loss-making orders,’” Winnie Wang, president of the Shenzhen Cross-Border E-Commerce Association, said Tuesday in Chinese, according to a CNBC translation.



She noted the case of one such company, which made 20 million yuan ($2.8 million) in revenue during the yuan’s weakening during the first half of the year, allowing it to raise employee salaries. But she said the company did not win a single order in July because the stronger yuan forced it to repeatedly raise its prices.



Ryan Zhao, director at an export-focused company called Jiangsu Green Willow Textile, said Tuesday that recent fluctuations in foreign exchange will cut into about 2% of profits on accounts receivable this month.



“We are concerned that a prolonged appreciation of the yuan will lead to price increases by Chinese suppliers, which will affect the export businesses,” he said in Chinese, according to a CNBC translation. He said the company’s way of dealing with exchange rate fluctuations is to negotiate a middle exchange rate with the customer.



China reported slower-than-expected growth in U.S. dollar-denominated exports for July on Wednesday, while imports surprised with a better-than-expected increase.



Exports have stood out as a bright spot as China’s economic growth slows. Many local companies from automakers to e-commerce players have accelerated overseas expansion plans to capture opportunities for faster growth abroad.



That also means Chinese companies are now more exposed to currency fluctuation risks. China’s foreign exchange regulator has in the last two years published guides on how businesses can mitigate such risks.



“Apart from geopolitical reasons, Chinese companies are increasingly focused on hedging currency risk because they are localizing operations globally – which makes their operations more complex than they used to be,” said Chris Pereira, president and CEO of consulting firm iMpact.



“In addition to hedging against traditional USD/RMB fluctuations, Chinese cross-border e-commerce companies are increasingly also hedging against the Euro, British Pound, and Japanese Yen,” he said Tuesday. Cross-border e-commerce refers to online shopping platforms selling products between different countries.



Pereira said many of his clients work with fintech companies such as Airwallex and LianLian Pay. “Larger Chinese cross-border e-commerce companies generally work with banks to secure forward contracts or options, allowing them to lock in exchange rates for future transactions,” he said.



<h2 class="wp-block-heading" id="h-changing-expectations"><a></a>Changing expectations</h2>



Global businesses and investors have increased their focus on currency risk in recent days. Many institutional investors on Monday started to unwind a popular ”carry trade” in the Japanese yen, which had played an attractive role in global asset allocation until the Bank of Japan raised interest rates last month to their highest since 2008.



The Chinese yuan has held a similarly attractive role due to low interest rates in China. But several analysts expected that could change.



“A large amount of foreign currency is awaiting settlement” against the yuan, Zhou Ji, macro FX analyst at Nanhua Futures, said in Chinese translated by CNBC.



Zhou noted lack of willingness to settle earlier in the year due to widespread expectations that the yuan would weaken against the U.S. dollar, a view partly supported by the People’s Bank of China’s latest interest rate cuts.



Fast-fashion giant Shein and PDD Holdings’ Temu are two of the most well-known examples of Chinese cross-border e-commerce companies. Many small businesses — which may have their own factories in China — have entered the industry to sell on TikTok, Amazon.com or platforms run by Alibaba.



Chinese policymakers have also encouraged the development of cross-border e-commerce by supporting special economic zones and overseas warehouse construction.



Official data claim explosive growth in the industry, with more than 120,000 cross-border e-commerce entities in China as of June.



Such online international commerce grew by 10.5% year-on-year in the first half of the year to account for nearly 5.8% of total trade, according to CNBC calculations of official data. That’s up slightly from a share of about 5.7% in the first quarter. A breakdown by exports and imports for the first half of the year was not immediately available.



Wang from the Shenzhen Cross-Border E-Commerce Association pointed out that large Chinese companies have tended to negotiate deals with business partners to mitigate currency risks.



For many smaller businesses, their expansion overseas has been part of an effort to move capital outside China, making them less affected by the latest currency moves, said Chris Sun, founder and CEO of BrandPal, an AI-based marketing company focused on short video monetization. The company claims its backers include Plug and Play Tech Center.



He said the companies, many newly registered in the last year or two, have focused on spending yuan within China while making U.S. dollars via overseas sales.

107184396-16747379042023-01-26t120649z_723665645_rc27yy9kye44_rtrmadp_0_thailand-economy

China’s exporters enjoyed the benefits of a weak yuan. Now that’s changing and cutting into profits

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<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1600" height="900" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3.jpeg" alt="" class="wp-image-515777" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3.jpeg 1600w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3-1536x864.jpeg 1536w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Pedestrians walk past a currency exchange shop in central Tokyo on April 17, 2024. Richard A. Brooks | Afp | Getty Images</figcaption></figure>



Rapid interest rate cuts from the Federal Reserve could make matters worse for the global “carry trade” unwind, according to economists at TS Lombard.



The warning comes as market participants seek to aggressively roll back on carry trades following a dramatic global sell-off in risk assets.



Carry trades refer to operations wherein an investor borrows in a currency with low interest rates, such as the Japanese yen, and reinvests the proceeds in higher-yielding assets elsewhere. The trading strategy has been hugely popular in recent years.



Stock markets in Europe were unsettled on Tuesday, paring earlier gains amid a faltering sense of relief.



An August stocks slump has been partly driven by weaker-than-expected U.S. economic data at the end of last week. The readings led investors to worry that the Federal Reserve may be behind the curve in cutting interest rates to fend off a recession.



“The natural reaction from the Fed to soft labour market data and fresh recession risks would be to cut rates and to do so relatively rapidly. But this would exacerbate any carry trade unwind,” economists at TS Lombard said in a research note published Monday.



“The US economy should trump all else, but it would make sense for central bankers to be cautious,” they added.



<h2 class="wp-block-heading" id="h-triple-whammy"><a></a>‘Triple whammy’</h2>



Led by Freya Beamish, economists at the investment strategy research firm said they hoped to see a coordinated message from the Bank of Japan and Fed to soothe market nerves.



“Then if the carry trade unwind really is a problem, we’d hope these central banks would take steps to introduce some form of quantity measures that would help prevent Japanese and other investors that have run on yen carry trades from having to sell assets, and facilitate the Fed cutting rates in due course without exacerbating financial fragilities,” economists at TS Lombard said.



A spokesperson for the Federal Reserve declined to comment when contacted by CNBC on Tuesday.



Traditional safe haven assets, such as the yen and Swiss franc, surged on Monday, fueling speculation that investors were seeking to quickly unload profitable carry trades to cover their losses elsewhere.



The Japanese currency has risen sharply against the U.S. dollar in recent weeks, trading at 145.07 per dollar at 1:10 p.m. London time on Tuesday. It marks a stark contrast from the run-up to the July 4th U.S. holiday, when the yen fell to 161.96 per dollar for the first time since December 1986.



Strategists at HSBC said there had essentially been a “triple whammy” of concerns in recent days, citing the unwind of carry trades, the monetization of artificial intelligence and the prospect of an imminent U.S. recession.



“We think it’s too early to buy just yet, but fundamentals are still broadly supportive,” HSBC strategists said in a research note published Tuesday.



“We think the biggest risk now is a self-feeding sell-off that would eventually prompt a recession, given negative wealth effects and tighter credit conditions,” they added.



<h2 class="wp-block-heading"><a></a>‘Reawakened with a vengeance’</h2>



Kit Juckes, chief foreign exchange strategist at Societe Generale, said in a recent research note that “the big carry unwind is underway.”



“You can’t unwind the biggest carry trade the world has ever seen without breaking a few heads. That is the impression markets give us this morning,” Juckes said on Monday.



Juckes flagged that the biggest foreign exchange market reaction was still one of “position reduction.” He said long positions against the Japanese yen for the Australian dollar, British pound, Norwegian krone and U.S. dollar were all being taken off.



A push below 140 a dollar for the Japanese yen in the near term “would be unsustainable given the impact on equities and inflation,” he added.



Economists at TS Lombard said Monday that global assets — from the U.S. to China — “look exposed.”



“Maturity mismatch in the external balance sheet, built up over years of BoJ excess accommodation, drove Japanese investors out of foreign assets as the curve flattened though the early part of the pandemic,” they continued.



“But monetary divergence since the Fed started raising rates then presented a new opportunity – the old carry trade reawakened with a vengeance.”



— CNBC’s Michael Bloom contributed to this report.

108015521-1722602037773-gettyimages-2147872842-AFP_34PM2M3

The popular ‘carry trade’ is unwinding — and economists fear Fed rate cuts could make matters worse

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline-820x462.jpeg" alt="" class="wp-image-515647" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A view of storage tanks and pipelines at the Shell Carson Distribution Complex, a distribution hub for petroleum products, in Carson, California, on March 11, 2022. Bing Guan | Reuters</figcaption></figure>



U.S. crude oil futures fell to a six-month low on Monday as equity markets sold off on fears the economy might be teetering on the brink of a recession.



West Texas Intermediate is now up roughly 2% for the year while Brent is now down marginally for 2024, after trading higher for months on geopolitical risk in the Middle East and forecasts that the oil market would tighten in the third quarter.



U.S. crude oil closed below $73 per barrel, the lowest settlement since Feb. 5.



“In times of crises all assets correlate,” Matt Smith, lead oil analyst for the Americas at Kpler, said of oil following equity markets lower. But geopolitical tensions in the Middle East and OPEC’s ongoing production cuts are providing a floor for crude prices, Smith said.



Here are Monday’s closing energy prices:



<ul class="wp-block-list">
<li>West Texas Intermediate&nbsp;September contract: $72.94 per barrel, down 58 cents, or 0.79%. Year to date, U.S. crude oil is up 1.8%.</li>



<li>Brent&nbsp;October contract: $76.30 per barrel, down 51 cents, or 0.66%. Year to date, the global benchmark has fallen about 1%.</li>



<li>RBOB Gasoline&nbsp;September contract:&nbsp;$2.33 per gallon, up more than 1 cent, or 0.69%. Year to date, gasoline is up 10.99%.</li>



<li>Natural Gas&nbsp;September contract: $1.94 per thousand cubic feet, down more than 2 cents, or 1.27%. Year to date, gas is down 22.75%.</li>
</ul>



The sell-off comes after U.S. job growth disappointed in July, with the unemployment rate rising to 4.3%, the highest level since October 2021. The U.S. manufacturing sector also contracted in July for the fourth consecutive month.



The weak economic data in the U.S. comes as lackluster demand in China had already been spooking traders.



“Already before we had the jobs report, already before the manufacturing data, we were concerned about weaker imports into China, weaker refinery utilization rates in China,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said on CNBC’s “Squawk Box” on Monday.



<h2 class="wp-block-heading" id="h-opec-plans-face-challenges">OPEC plans face challenges</h2>



OPEC+ is also expected to start increasing production in October, though the group indicated last week that this decision “could be paused or reversed, depending on prevailing market conditions.” Croft said OPEC+ is now unlikely to start ramping up production.



“If the trend continues, I just can’t imagine OPEC would go forward with increasing output into this market. The question is, would they go the opposite way given the conditions we’re seeing,” Croft said, suggesting the oil producers could cut production again.



Bob Yawger, executive director of energy futures at Mizuho Securities, said OPEC+ seems interested in moving forward with the production increase based on last week’s statement, but they may not be able to afford to do so at this point. Rolling oil bank onto the market at current prices would “tank” the market, Yawger said.



<h2 class="wp-block-heading" id="h-geopolitical-risk"><a></a>Geopolitical risk</h2>



Geopolitical risk remains present with Israel preparing for an attack from Iran after the assassination of Hamas leader Ismail Haniyeh in Tehran last week.



“That exchange of fire in April between Iran and Israel was relatively contained, did not lead to any market disruptions,” Croft said. “But the question is now are we looking at something more coordinated with Hezbollah, Iran, Hamas.”



Bob McNally, president of Rapidan Energy, warned that tensions in the Middle East are “climbing the escalation ladder.” If Iran strikes Israel and kills civilians, the Netanyahu government will hit back much harder, he said.



“Israel is in a not in an eye for an eye mode,” McNally said. “They’re in three eyes for one eye mode.

107387062-17103533112022-03-12t000514z_565864485_rc2c0t9vvjxf_rtrmadp_0_ukraine-crisis-usa-gasoline

U.S. crude oil falls to six-month low as market sells off on recession fears

Why Monthly Home Payments Are Skyrocketing Right Now

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2-820x462.jpeg" alt="" class="wp-image-515303" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man looks at an electronic boarddisplaying stock prices of the Nikkei 225 listed on the Tokyo Stock Exchange in Tokyo on April 30, 2024.  Kazuhiro Nogi | Afp | Getty Images</figcaption></figure>



Investors on Monday turned to safe-haven assets as a global stock sell-off deepened, following weaker-than-expected U.S. jobs data at the end of last week.



The disappointing jobs report spurred investor fears that the Federal Reserve made a mistake last week when it kept interest rates unchanged, and that the world’s largest economy is headed toward a recession.



The stock sell-off has also been exacerbated by volatility in some of the major earnings and a more hawkish Bank of Japan, which has led to speculation that the popular yen “carry trade” has imploded over a short-term basis. A “carry trade” takes place when investor borrows in a currency with low interest rates, such as the yen, and reinvests the proceeds in a currency with a higher rate of return.



On Monday morning, the Swiss franc strengthened 1.2% against the dollar to trade at 0.847 against the greenback, or its strongest level since January this year.



Similarly, U.S. Treasury yields extended their fall to notch a one-year low. At 2:41 a.m. ET, the yield on the 10-year Treasury was down by over eight basis points to 3.7099%. The 2-year Treasury yield was last trading at 3.7315% after falling by around 14 basis points. The yield on Japan’s 10-year government bond also dipped to 0.204%.



Gold futures climbed 0.38% to trade at $2,479.2 per ounce.



The buying was in sharp contrast to the selling seen in the stock markets. U.S. stock futures fell early Monday, with the Dow Jones Industrial Average futures declining by some 600 points by 4 a.m. ET, or roughly 1.5%. S&amp;P 500 futures and Nasdaq-100 futures dipped 2.8% and 4.9%, respectively.



Japan stocks confirmed a bear market in Asia overnight. The 12.4% loss on the Nikkei — which brought it to close at 31,458.42 — marked the worst day for the index since the “Black Monday” of 1987. The loss of 4,451.28 points on the index was also the largest decline in terms of points in its entire history.



In Europe, the regional Stoxx 600 index was 2.34% lower, with all sectors and major regional bourses trading in the red. Tech stocks shed as much as 5% before paring losses slightly to trade down 2.8%. Mining stocks also lost 3.65%, while banks were 3.22% lower.



Ted Alexander, chief investment officer at BML Funds, said that the current volatility in markets has “been a long time coming,” and that it was not a reason to panic.



“Everyone’s been expecting it for a while, [it’s] great for active managers,” he told CNBC via email, adding that the shake up may actually bring equity investors back if stocks offer better value.



“Stock markets aren’t cooked yet. Don’t abandon some exposure to tech and growth,” Alexander said.



—CNBC’s Sarah Min and Lim Hui Jie contributed to this report

107408859-1714578761524-gettyimages-2150252824-AFP_34QJ4L2

A global stock rout is deepening with investors fleeing to safe havens

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="960" height="730" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx.jpeg" alt="" class="wp-image-515252" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx.jpeg 960w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx-300x228.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx-820x624.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx-118x90.jpeg 118w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx-768x584.jpeg 768w" sizes="auto, (max-width: 960px) 100vw, 960px" /><figcaption class="wp-element-caption">Stock market numbers are displayed on a screen at the New York Stock Exchange during afternoon trading on August 02, 2024 in New York City. Michael M. Santiago | Getty Images</figcaption></figure>



LONDON — European stocks fell sharply at the start of the Monday session, as global volatility continues amid concerns of a looming U.S. recession.



The regional Stoxx 600 index was 2.77% lower by 8:19 a.m. London time, with all sectors and major regional bourses trading in the red. Tech stocks led losses, shedding as much as 5% before paring losses slightly to trade down 4.7%, while banks were 3.7% lower.



The lower start for major European markets comes amid wider global volatility; U.S. stock futures fell Sunday night following a turbulent last week for Wall Street, in which the Nasdaq Composite dropped into correction territory. Asia-Pacific markets also continued the selloff overnight.



Earnings in Europe come from Uniper, Infineon, Monte dei Paschi and Palantir Technologies on Monday. Data releases include services purchasing managers’ index data from the U.K, Italy and Spain.

108015858-1722630576753-gettyimages-2165010509-ms1_7647_t8akammx

European markets plunge 2.7% as global volatility deepens; tech stocks shed 4.7%

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-820x461.jpeg" alt="" class="wp-image-515232" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Nurphoto | Nurphoto | Getty Images</figcaption></figure>



The cryptocurrency market plummeted in value on Sunday, as investors continued selling out of risky assets.



Led by a drop of 11% in bitcoin in the past 24 hours and a 21% plunge in ether, the overall value of cryptocurrencies sank by about $270 billion, according to CoinGecko data.



The selloff in the crypto market coincided with a broader slide in equities in Asia-Pacific markets. Japan’s Nikkei 225 dropped as much as 7%, extending losses that began last week, after the Bank of Japan announced it would hike its benchmark interest rate to the highest level in 16 years.



In the U.S. the Nasdaq slid 3.4% last week into correction territory, capping off the tech-heavy index’s worst three-week stretch since September 2022, when the market was in freefall. Amazon and Nvidia contributed to the declines.



Last week’s drop in stocks was tied in part to disappointing earnings, a weaker-than-expected jobs report, higher unemployment and a declining manufacturing sector. The U.S. Federal Reserve opted to hold its benchmark rate steady and didn’t promise a rate cut in September, which many market experts had baked into their forecast. Lower interest rates tend to correlate with better performance for risky assets.



Bitcoin’s price has reached its lowest level since February. The world’s largest cryptocurrency is trading at about $54,000. It’s still up almost 23% this year.



The price of ether, the native token underpinning the ethereum blockchain, fell to around $2,300 and has erased its gains for the year. Binance’s BNB token was down more than 15% and solana is trading 10% lower.



Investors are also looking out for new trade data from China and Taiwan this week, as well as central bank decisions in both India and Australia.



The latest crypto wipeout will be felt by a broader base of investors after the SEC this year approved new spot exchange-traded funds for bitcoin and ether. The ETFs have seen hundreds of millions of dollars flow into the coins. On Friday, CNBC reported that Morgan Stanley would soon allow its 15,000 financial advisors to pitch bitcoin ETFs to its clients, a first for Wall Street.

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Crypto selloff wipes out $270 billion in value as bitcoin, ether plunge

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Job growth in the U.S. slowed much more than expected during July and the unemployment rate ticked higher, fueling fears of a broader economic slowdown, the Labor Department reported Friday.



Nonfarm payrolls grew by just 114,000 for the month, down from the downwardly revised 179,000 in June and below the Dow Jones estimate for 185,000. The unemployment rate edged higher to 4.3%, its highest since October 2021.



Average hourly earnings, a closely watched inflation barometer, increased 0.2% for the month and 3.6% from a year ago. Both figures were below respective forecasts for 0.3% and 3.7%.



Stock market futures added to losses following the report while Treasury yields plunged.



The labor market had been a pillar of economic strength but has recently shown some trouble signs, and the July payrolls increase was well below the average of 215,000 over the past 12 months.



“Temperatures might be hot around the country, but there’s no summer heatwave for the job market,” said Becky Frankiewicz, president of the ManpowerGroup employment agency. “With across-the-board cooling, we have lost most of the gains we saw from the first quarter of the year.”



From a sector standpoint, health care again led in job creation, adding 55,000 to payrolls. Other notable gainers included construction (25,000), government (17,000), and transportation and warehousing (14,000). Leisure and hospitality, another leading gainer over the past few years, added 23,000.



The information services sector posted a loss of 20,000.



While the survey of establishments used for the headline payrolls number was discouraging, the household survey was even more so, with growth of just 67,000, while the ranks of the unemployed swelled by 352,000. The participation rate as a share of the working-age population edged higher to 62.7%.



The report adds to mixed signals recently about the economy and with financial markets on edge about how the Federal Reserve will respond.



Though markets on Wednesday cheered indications from the Fed that an interest rate cut could come as soon as September, that quickly turned to trepidation when economic data Thursday showed an unexpected jump in filings for unemployment benefits and a further weakening of the manufacturing sector.



That triggered the worst sell-off of the year on Wall Street and renewed fears that the Fed may be waiting too long to start cutting interest rates.&nbsp;Easing wage gains could help policymakers feel more confident that inflation is progressing back to their 2% goal.



The rise in the unemployment rate brings into play the so-called Sahm Rule, which states that the economy is in recession when the three-month average of the jobless level is half a percentage point higher than the 12-month low. In this case, the unemployment rate was 3.5% in July 2023 before it began its gradual ascent. The three-month unemployment rate average moved up to 4.13%.



“The latest snapshot of the labor market is consistent with a slowdown, not necessarily a recession,” said Jeffrey Roach, chief economist at LPL Financial. “However, early warning signs suggest further weakness.”



Roach pointed out that the ranks of those working part-time for economic reasons jumped to 4.57 million, an increase of 346,000 to the highest level since June 2021.



An alternate measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons surged 0.4 percentage point to 7.8%, the highest since October 2021.



Long-term unemployment also ticked higher. Those reporting being out of work for 27 weeks or more totaled 1.54 million, the most since February 2022.



Wall Street had been bracing for modest gains from the July payrolls report, in part over concerns about growth but also from residual impacts from Hurricane Beryl. The storm badly damaged parts of Texas including the Houston metropolitan area.&nbsp;



Despite some anxiety over the state of economic growth, Fed Chair Jerome Powell on Wednesday expressed confidence about the “solid” economy and said easing inflation data is raising confidence that the central bank can cut soon.&nbsp;



Markets have fully priced in a rate cut of at least a quarter percentage point at each of the three remaining Fed meetings this year. Odds are rising that the Fed even may go beyond traditional quarter point reductions.



“While the labor market has remained remarkably resilient over these past two years of elevated interest rates, it’s important for the Federal Reserve to stay ahead of any further labor market slowing by proceeding with its expected September rate cut,” said Clark Bellin, chief investment officer at Bellwether Wealth.



Correction: The forecast for average hourly earnings was for an increase of 0.3% for the month. An earlier version misstated the percentage.

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