NHKFri, 02 Aug 2024 17:24 UTC
© BloombergFILE: A man looks at a stock board in Tokyo as the Nikkei index plunged 5 percent.
Tokyo's benchmark Nikkei Stock Average nosedived on Friday with
its biggest one-day drop since the "Black Monday" crash in 1987. Investors worried whether a gloomier US economic outlook would impact the Japanese economy.
The Nikkei 225
plummeted by 2,216 points, or 5.8 percent, to finish at 35,909.
Investors unloaded shares across the board following an overnight tech-driven selloff in New York,
triggered by a series of weaker-than-expected US economic data.
The rise of the yen against the dollar also prompted investors to sell Japanese stocks.
The Nikkei 225 finished below the 36,000 mark for the first time in six months. The index had been on an upward trend this year and hit its all-time closing high about three weeks ago when it went above 42,000.
Comment: Interestingly, a week or so ago:
Japan and China resume strategic dialogue after 4 years Business Live
reports on the situation in the US, and its impact elsewhere:
Global markets slump on US recession fears as FTSE 100 tumbles and Amazon shares crash
Global stock markets have been rattled by mounting concerns over a potential US economic downturn, leading to widespread sell-offs.
The S&P 500 dropped 1.4 per cent in the latest session and has seen a decline of over three per cent in the past three weeks, while the tech-heavy Nasdaq plummeted by 2.3 per cent and the Russell 2000, which tracks small-cap stocks, fell by three per cent.
China's Shanghai Stock Exchange also felt the pressure, dipping by one per cent, alongside Australia's ASX 200, which slid over two per cent.
European markets were not immune to the tremors, as the FTSE 100 declined by 1.6 per cent since yesterday afternoon amid growing trepidation regarding US economic health, and the pan-European Stoxx 600 retreated by 2.3 per cent from the same point, as reported by City AM.
"The prospect of the US experiencing an economic slump has far-reaching consequences, which is why stock markets were weak around the world on Friday," commented Russ Mould, investment director at AJ Bell.
The unease was sparked by disappointing US purchasing manufacturer index data released yesterday, indicating a contraction in new orders for the first time in three months and only marginal output growth.
Adding to the market's woes, a series of lacklustre earnings reports from major US tech companies further dampened investor sentiment.
Amazon's shares took a seven per cent hit in after-market trading as the e-commerce behemoth's earnings report revealed missed revenue estimates and issued disappointing guidance for Q3.
In another tech sector blow, Intel saw its stock plummet by a staggering 19 per cent following the announcement of plans to slash over 15,000 jobs in an effort to "resize and refocus" its operations.
While these tech results could be seen as isolated incidents, they reflect broader market concerns that the unexpected robustness of the US economy may be starting to falter.
Tech giant Nvidia has been the hardest hit by this wave of panic, with its shares falling 6.7 per cent yesterday and nearly 20 per cent over the past three weeks.
"Corporate results are only the tip of the iceberg," commented Pierre Veyret, an analyst at Activtrades. "Indeed, many investors are losing confidence after the Fed held interest rates unchanged during the latest FOMC meeting earlier this week."
With fears of a US economic slowdown, or even a recession, markets are hopeful that the Federal Reserve will start to cut interest rates, despite inflation remaining high.
Market predictions now anticipate a rate cut at every Fed meeting for the remainder of the year, with a 32 per cent chance that one of those three will be a 50 basis point cut, up from just seven per cent a week ago.
The likelihood of a 50 basis point cut at the Fed's next meeting in September has also doubled, from 11.5 per cent to 27.5 per cent, according to data from CME Group.
"As usual, whenever uncertainty rises and confidence drops, investors tend to reduce their exposure to riskier assets and seek safety, which explains the current stock sell-off and increased appetite for treasuries," noted Veyret.
Reflecting this trend, US treasuries experienced a surge in demand throughout the week, with the two-year yield dipping to its lowest point since May 2023 as market participants gravitate towards the security of bonds and anticipate rate reductions by the Fed.
"The list of worry points for the market is growing. On top of geopolitical tensions between the West and China, ongoing Middle East violence and the US presidential election, we've now got recession fears and that will stoke debate over whether the Fed has acted too late with cutting interest rates," observed Mould.
FX Street
reports on gold:
Daily digest market movers: Gold price soars on weak US NFP, escalated geopolitical tensions
- Gold price jumps above $2,470 in Friday's New York session session. The precious metal aims to recapture all-time highs above $2,480 as market speculation for the Fed to begin reducing interest rates in September appears to be certain amid deteriorating labor market conditions.
A fresh upside would appear if the Gold price breaks above its all-time high of $2,483.75, which will send it into unchartered territory.
Back in May:
China buys huge ยฃ135billion stockpile of goldAnd last year:
Russia's RT confirms BRICS will create a gold-backed currency
Given the dire geopolitical situation, a lack of confidence seems to be a reasonable response from investors. However, this turbulence may not be the main show, and instead may just be a preview of what's to come at a later date.
It's possible that what we're currently seeing is just the Western establishment - which basically controls world financial markets - through these fluctuations, leeching out the last dregs of wealth from the markets whilst it still has a chance.
Ultimately, with the West-Israel's nefarious agendas being thwarted at every turn by the multinodal world's mutually beneficial deals, it does seem likely that, in a desperate attempt to delay the inevitable loss of their diabolical dominance, they will eventually unleash carnage in the financial markets.
It's going to happen anyway, and so one would suppose that they're going to try to leverage it to their advantage; because if they can't win, everyone must suffer. That said, if recent events are anything to go by, it's likely that this may not go entirely as planned.
See also:
Comment: Interestingly, a week or so ago: Japan and China resume strategic dialogue after 4 years Business Live reports on the situation in the US, and its impact elsewhere: FX Street reports on gold: Back in May: China buys huge ยฃ135billion stockpile of gold
And last year: Russia's RT confirms BRICS will create a gold-backed currency
Given the dire geopolitical situation, a lack of confidence seems to be a reasonable response from investors. However, this turbulence may not be the main show, and instead may just be a preview of what's to come at a later date.
It's possible that what we're currently seeing is just the Western establishment - which basically controls world financial markets - through these fluctuations, leeching out the last dregs of wealth from the markets whilst it still has a chance.
Ultimately, with the West-Israel's nefarious agendas being thwarted at every turn by the multinodal world's mutually beneficial deals, it does seem likely that, in a desperate attempt to delay the inevitable loss of their diabolical dominance, they will eventually unleash carnage in the financial markets.
It's going to happen anyway, and so one would suppose that they're going to try to leverage it to their advantage; because if they can't win, everyone must suffer. That said, if recent events are anything to go by, it's likely that this may not go entirely as planned.
See also: