US markets are closed on Monday in observance of Martin Luther King’s birthday. But trading in stock index futures on Monday, while light and not always a reliable indicator, pointed to a substantial decline on Wall Street. Futures in the Dow Jones industrial average were down 520 points, or more than 4 per cent.

Stocks received no lift on Friday despite an announcement that the Bush administration would seek a stimulus package of as much as $145 billion.

Market participants said that meant investors were convinced that an American recession is looming, and economists and strategists said the effect would span the globe. No matter how many bridges, roads and power plants China builds, or new cars India sells, a downturn in the US will batter Asian economies, they said.

Investors in Asia have been in a state of denial about the possibility of a recession in the US, said Adrian Mowat, chief strategist for JPMorgan in Asia. But now, he said, “there’s no debate about it.” Instead, he said investors were asking “how long and how deep” the recession might be.

In recent months, some emerging market investors have preached the idea that fast-growing areas like most of Asia have “decoupled” from developed markets, meaning economies of the two groups no longer move in tandem. The investing adage “When the US sneezes, Asia catches a cold” no longer applies, the proponents of decoupling argue. But a recent slump in emerging markets, capped by Monday’s slide, means investor sentiment is changing.

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