Global Markets in Freefall: Recession Fears Spark Historic Crash

Fears of a U.S. recession tanked global markets Monday, with Japanese stocks suffering their biggest single-day rout since 1987's Black Monday.

Why it matters: Friday's dismal U.S. jobs report capped a series of worrying economic signs over the past few weeks, with clear cracks in what had been a robust post-pandemic expansion.

Zoom in: Wall Street's fear gauge, the VIX, is trading at levels not seen since June 2020.

• U.S. stock futures tumbled Monday, with NASDAQ's futures falling as much as 4% pre-open.

Zoom out: In Japan, the Nikkei average shed a staggering 12.4% — the index's worst showing in percentage terms since the October 1987 crash, Reuters reports.

• The Nikkei's 4,451-point loss was the biggest ever — eclipsing the 3,836 points it lost on Oct. 20, 1987, when the Black Monday crash hit Japan.

Catch up quick: U.S. July employment numbers showed weak job creation and the highest unemployment rate since October 2021. At 4.3%, the jobless rate is still low, but in a healthy economy, the kind of rise we've seen — a gain of 0.6 percentage points since January — is a warning sign that a recession may be imminent.

Between the lines: The recent batch of economic data indicates that the Federal Reserve waited too long to cut interest rates. Given the delays with which Fed policy affects the economy, the new numbers suggest the Fed should have started adjusting policy several months earlier.

What we're watching: The big question now is whether this is the beginning of a global, risk-off movement that will spread deeper across markets.

This article originally appeared on Axios.