Japan’s Nikkei 225 index surged over 10% on Tuesday following significant drops in European and U.S. markets. This uptick came after a turbulent Monday start reminiscent of the 1987 market crash seen globally, particularly on Wall Street, as concerns grew about a slowing U.S. economy.
Despite the 11% gain early on Tuesday, the Nikkei settled 8.7% higher at 34,211.83 as investors sought bargains after the previous day’s 12.4% decline. Monday saw the S&P 500 drop 3%, its worst performance in nearly two years, with the Dow Jones Industrial Average and Nasdaq also experiencing significant slides.
The global sell-off that began last week intensified after a report revealed slower-than-expected hiring by U.S. employers, raising fears that the Federal Reserve’s high interest rates were hindering economic growth to combat inflation. Professional investors acknowledged technical factors amplifying market reactions and cautioned against overreactions despite significant losses across various markets.
Amidst the market turbulence, Hong Kong’s Hang Seng index rose by 1.1%, South Korea’s Kospi index dropped 8.8%, and Bitcoin experienced a notable decline. Gold, typically considered a safe-haven asset, also dipped by around 1%.
The Bank of Japan’s recent decision to increase its main interest rate contributed to market volatility by causing traders to exit deals borrowing money at low rates from Japan. Despite the market fluctuations, the U.S. economy’s growth continues, and expectations for corporate profits remain high.
The recent declines in Wall Street, particularly within the Big Tech sector, were attributed to concerns about inflated stock prices and slowing growth expectations. Apple, Nvidia, and Alphabet faced significant losses, with prominent investors such as Warren Buffet reducing their stakes in these companies.
The S&P 500, Dow Jones Industrial Average, and Nasdaq composite each experienced substantial decreases. Furthermore, uncertainties surrounding geopolitical tensions, war situations, and upcoming U.S. elections added to market anxieties.
In light of current market conditions, Vice President Kamala Harris may face challenges related to a potential recession, while former President Donald Trump could shift focus from inflation concerns to economic revival strategies. Ultimately, job data will play a crucial role in shaping market sentiment and influencing the upcoming elections.
