European markets opened higher on Tuesday morning, as the Japanese stock index soared nearly 11% overnight following a sell-off.
Has been a scare as intense as it is brief, a stock market summer storm. European markets opened higher on Tuesday, with the German DAX, the French CAC 40 and the London FTSE 100 all in the green after the massive sale of Monday.
For its part, the Japanese Nikkei 225 index rose almost 11%, a day after causing the fall of European markets and Wall Street. Other Asian markets also rebounded, but more moderately, appearing to stabilize somewhat after theroller coaster that started the week.
An eighties-style panic Monday
The terrifying Black Monday It started with a nosedive abroad that was reminiscent of the crash of 1987, which traveled around the world and devastated Wall Street with more heavy losses, as fears about the slowdown of the US economy worsened. Wall Street closed with the biggest losses in two years.
He Nikkei The Tokyo stock market rose almost 11% early on Tuesday, its biggest rise since 2008and revalued by 10.3% in the early afternoon, thanks to the bargains of investors after the 12.4% drop the previous day.
On Monday, the S&P 500 fell 3% in its worst day in almost two years and closed at 5,186.33 points. The Dow Jones Industrial Average fell 1,033 points, or 2.6%, to 38,703.27, while the Nasdaq Composite fell 3.4% to 16,200.08, as Apple, Nvidia and other big tech companies that used to be the stars of the stock market were still withering.
Fear of an economic collapse in the US
The declines were the latest in a wave of global selling that began last week, and was the first opportunity for traders in Tokyo to react to Friday’s report showing that U.S. employers slowed their hiring last month much more than economists expected.. This was the latest weaker-than-expected data on the U.S. economy, raising fears that the Federal Reserve has put too much pressure on the brakes on the U.S. economy for too long through higher interest rates. raised in the hope of quelling inflation.
According to a report published Monday by the Institute for Supply Managementhe Growth of US service companies was a little stronger than expectedled by the arts, entertainment and leisure sectors, along with accommodation and food services.
Professional investors warned that some technical factors could be amplifying the steep losses. The index Kospi of South Korea fell 8.8%, and bitcoin fellbelow $54,000 on Monday from over $61,000 on Friday.Even the orowhich is reputed to offer security as a refuge in tumultuous times, fell about 1%.
Uploads throughout Asia
On Tuesday, almost all Asian markets, except Singapore, they recorded profits. The Kospi rose 4.3%, to 2,546.64 points. The Hang Seng Index Hong Kong It rose 0.5%, to 16,775.65 points. In Australiathe S&P/ASX 200 rose 0.3% to 7,677.50 points.
He Taiex of Taiwan It rose 1.2%, after collapsing 8.4% the day before. The Shanghai Composite Index, which was unaffected by Monday’s drama, rose just over a point to 2,861.87 points.
The harms of high interest rates
Monday’s plunges reflected fear that damage caused to the economy by prolonged high interest rates have been so severe that the Federal Reserve has to cut rates in an emergency meeting, before its next decision scheduled for September 18. The yield on the two-year Treasury note, which closely tracks the Federal Reserve’s expectations, briefly dipped below 3.70% in the morning, from 3.88% at the end of Friday and 5% at April. It later recovered and returned to 3.89%.
“The Fed could ride in on a white horse and save the day with a big rate cut, but the case for a cut between meetings seems weak,” he said. Brian Jacobsenchief economist of Annex Wealth Management. “They are usually reserved for emergencies, like COVID, and a 4.3% unemployment rate doesn’t really seem like an emergency.”
A US recession seems far away
The US economy continues to grow, so a recession is far from certain. The US stock market continues to rise apace this year, with double-digit percentage gains for the S&P 500, the Dow and the Nasdaq Composite.
Some of Wall Street’s recent declines may simply be air coming out of a stock market that has reached dozens of all-time highs this year, partly because of the frenzy around artificial intelligence technology. Critics have long said the stock market looked expensive after prices rose faster than corporate profits.
US elections affected by market gyrations
Las Profit expectations remain highand the S&P 500’s earnings growth in the latest quarter appears to be the strongest since 2021.
ADVERTISINGThe upcoming US election could shake things up even more: Aside from the potential impact of policies following the vote, market gyrations could affect the election itself.
A recession would likely put the vice president Kamala Harris defensively, but slower growth would undermine inflation. That would force Donald Trump to focus on ways to revive the economy rather than focusing on higher prices.
The Bank of Japan helped Monday’s crash
The measure adopted last week by the Bank of Japan of raise your main interest rate from almost scratch was another of the factors that promoted Monday’s crash in Tokyo. Higher rates may boost the value of the Japanese yen, but they force traders to unwind trades in which they had borrowed money for virtually no cost in Japan and invested it elsewhere in the world.
On Tuesday, the dollar was worth 145.33 yen, down from 144.17 yen on Monday.
ADVERTISINGThe rise in share prices of large technology companies, such as Apple, Nvidia and others known as the seven magnificents, faltered last month on fears that prices had outpaced expectations for its future growth. Disappointing earnings from Tesla and Alphabet added to the pessimism.
Apple fell 4.8% on Monday after Berkshire Hathawayproperty of Warren Buffett, revealed that it had cut its stake in the iPhone maker.
Nvidiathe chip company that has become the image of the artificial intelligence bonanza on Wall Street, it fell 6.4%. Analysts cut their profit forecasts for the company after a report from The Information claims that Nvidia’s new AI chip has been delayed. The recent sales have cut Nvidia’s profit for the year to nearly 103% from 170% in mid-June.
Alphabetfor its part, fell 4.4% after a US judge ruled that the search engine Google has illegally taken advantage of its dominant position to crush competition and stifle innovation.
ADVERTISINGOther concerns also weigh on the market. Israel’s war on Gaza and other hotspots of global tension could cause fverses fluctuations in the price of oil.
Early on Tuesday, US benchmark crude rose 1.18 dollars, to 74.12 dollars per barrel, and Brent crude, the international standard, advanced 1 dollar, to 77.30 dollars per barrel.
The euro rose to $1.0956 from $1.0954.
