There is fear on the financial markets that an economic crisis is looming in the USA. In Asia, prices are collapsing.
The sell-off on the Asian stock markets continued at the start of the new trading week. Concerns about a possible hard landing of the US economy continued to scare investors on Monday. Technology stocks also suffered from a report that chip manufacturer Nvidia is postponing the launch of new AI chips due to so-called design defects. Nvidia has recently been the driving force behind the general stock market rally as a major beneficiary of artificial intelligence.
Investors in Japan in particular took further price gains. The leading index Nikkei 225 ended up falling by 12.4 percent to 31,458.42 points. That was the lowest level since November 2023. Trading was temporarily suspended due to the sharp price fluctuations. Because the Nikkei has now lost more than 20 percent from its recent record high, stock market traders are talking about a bear market.
After a months-long price rally in Japan, the Nikkei 225 reached a high of 42,400 points in mid-July. But then the national currency, the yen, experienced a sharp rise within a short period of time, which put a heavy strain on the share prices of export-dependent Japanese companies. Against the US dollar, for example, the yen fell on Monday to its lowest level since the beginning of the year.
Panic over US economy
Commerzbank’s foreign exchange experts spoke of a “panic on the market with regard to the US economy”. Global stock indices are risk averse and are selling stocks. With regard to the US, the question arises whether a recession can be avoided in view of the recent weak economic data and an “unprecedented cycle of interest rate hikes”.
The Chinese stock markets held up better than the Japanese indices. The Hang Seng Index of the Hong Kong Special Administrative Region recently fell by 2.7 percent to 16,494 points. The CSI 300, which includes the 300 most important stocks on the Chinese mainland stock exchanges, held up even better, down 1 percent to 3,351 points. However, both indices had already lost significant amounts in recent weeks.
The Australian stock market was also unable to escape the weak performance. The S&P/ASX 200 slipped by 3.7 percent to 7,649.60 points.
Source: Stern
