'Markets in meltdown': ASX set for more pain as global stock markets drop sharply

The Australian share market suffered its worst day in more than four years on Monday as rising fears of a US recession sparked global panic selling.

Not since March 2020, when markets were spooked by the outbreak of the COVID-19 pandemic, has the ASX experienced such a vicious two-day sell-off. Source: AAP / Bianca De Marchi

Wall Street's main indexes have slumped as fears of the United States tipping into recession following weak economic data last week rippled through global markets.

The background: Bourses from Asia to Europe took a beating and bond yields slipped as investors rushed to safe-haven assets and bet the US Federal Reserve would need to cut interest rates aggressively to spur growth.

The bigger picture: US Treasury yields fell to their lowest in a year and a closely watched gap between two- and 10-year Treasury notes turned positive for the first time since July 2022, usually indicating US economy is heading into a downturn.

Offering some respite, data showed US services sector activity rebounded from a four-year low in July amid a rise in orders and employment.

The key quote: "The markets are in meltdown and it's a sea of red across the world," said capital.com analyst Kyle Rodda.

What else to know: Australian stocks closed down 3.7 per cent on Monday, wiping more than $100 billion from the stock market.

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