Monday 5 August 2024 saw a sell-off that rocked stock markets around the world. It started in the Asia-Pacific region when Japan bowed to a bear market as investors continued their liquidation spree.
Economy Fears Spike As Global Stock Markets Tank
Both the Nikkei 225 and TOPIX plunged by more than 12%. Benchmark indexes, which attained a record high on 11 July 2024, lost more than 20%. CNBC indicated that the Nikkei’s 12.4% decline was its worst day since ‘Black Monday’ in 1987. TOPIX fell by 12.23%.
The Nikkei lost all financial traction gained since the start of this year. Trading giants such as Mitsubishi Corporation (8058.T), Mitsui & Co, Ltd. (8031.T) and Marubeni Corporation (8002.T) had their market caps depleted by more than 14%, with Mitsui losing close to 20%.
These movements rippled to markets across the board and upended what the Associated Press (AP) described as a “relatively calm year in markets”. AP attributed Japan’s index nightmare to investor worries about the sluggish US economy.
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Up to yesterday, traders staked their coins on stocks and gave these markets a leg up as most expected central banks to start reversing high interest rates. Robust tech stocks and the untapped possibilities of artificial intelligence also added momentum.
Tech giant Nvidia (NVDA) joined the $3tn club and bolstered the historic highs of the S&P 500, Nasdaq and Nikkei. Investors regarded high interest rates as a positive preventing a sharp plunge in the US economy.
Yesterday’s performance, however, has many taking stock and listening to concerns that tech shares are too expensive. Weak US labour, manufacturing and construction data, released in the week ending Friday 2 August 2024, renewed worries of a US economic recession.
