The stock indices of the world’s major financial markets plunged on Monday, starting with the sharp fall in Tokyo. In New York, Wall Street collapsed and the Dow Jones, on its worst day since 2022, lost 2.60% to 38,703.27 points.
In Tokyo, the benchmark Nikkei 225 index rose 10.23 percent to 34,675.46 points, and the broader Topix gained 9.30 percent to 2,434.21 points.
The Nikkei had plunged more than 12%, or 4,451.28 points, the day before, its biggest point loss in history.
In Europe, the day after a red close, the main European stock markets remain in negative territory. Madrid is down 1%; Frankfurt 0.4%; London 0.6%; Paris 1.2%; and Milan 1.4%.
At the currency level, after soaring on Monday, the yen fell 1.09% against the dollar, to 145.78 yen per greenback at 07:30 GMT and 0.98% against the euro, to 159.46 yen per euro.
According to data released last week, the US economy added 114,000 jobs last month, a drop from the previous month and less than expected, while the unemployment rate rose to 4.3%, the highest level since October 2021.
The figures gave investors the impression that the Federal Reserve had delayed interest rate cuts for too long and could trigger a recession, analysts said.
Now with the news coming from Asiaperhaps more reassuring, the futures of Dow Jones are also rebounding as global markets begin to recover from the sell-off.
However, the situation doesn’t look so optimistic as can be seen from the European session. S&P 500 futures are up just 0.5%, Dow futures are up 0.8%, while Nasdaq 100 futures are up just 0.6%.
While, The VIX index, the S&P 500’s volatility gauge, is also coming off session lows.
Following Monday’s historic session, experts have drawn some conclusions that could help keep a cool head in moments like those experienced in recent sessions.
There appears to be no specific news catalyst behind the less positive tone.rather, it is a sign of underlying unease following recent sharp moves. The VIX index, the S&P 500’s volatility gauge, is also coming off session lows.
Conclusions of the session to forget
From JP Morgan They say that “we remain cautious on equities, waiting for the ‘bad is bad’ phase to set in and stocks to weaken as bond yields fall” (something that is already happening now following weak data from the US and Eurozone).
“In this context,” they point out, “risky operations are not carried out, since this is the opposite of recovery,” so they advise taking refuge in “purely defensive values.”
According to the forecast, European stock markets will continue to be under pressure due to “the slowdown in activity” shown by the PMI indicators, as well as “lower expected corporate results, the fall in bond yields” and “high geopolitical risk”.
On the other hand, they argue that “the VIX (volatility index) has not had an adequate capitulation for some time and credit spreads are extremely narrow.” In this sense, they add that “the Federal Reserve will begin to relax its policies, but in a more reactive way and in response to the weakening of growth, that is, it is likely to be behind the curve; and this might not be enough to trigger a rebound” in the stock markets.
In his opinion, “one should be cautious” with regard to European stock markets, although he adds that “towards the end of the year an opportunity will present itself to adopt a bullish attitude.”
Nikkei rebounds, but remains in bear market
Most Asian stock markets rallied on Tuesday, with Japan’s benchmark Nikkei 225 index leading the way. The Nikkei rose 10% on Tuesday, helped by discounted buying as investors flocked to stocks with solid fundamentals that are likely to benefit from lower interest rates in coming months.
However, The Nikkei is still in bear market territory after falling 12.4% in the previous sessionits worst day since the Black Monday crash of 1987.
Despite this, the recovery in the Japanese markets is still “a bit far”with markets likely to trade flat in the near term before gaining enough confidence for a recovery, analysts said. Citi. The short-term outlook for Japanese markets remains bleak, with Wall Street banking giants forecasting moves towards defensive assets will dominate. The brokerage recommended defensive sectors in the short term.
Source: Ambito
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