Global stock markets suffered a massive loss of $6.4 trillion in the global rout on ugust 5. A fragile calm returned to markets on August 6.
Bloomberg wrote that contracts on the Nasdaq 100 index rose more than 1%. The European Stoxx 600 index rose 0.7% after falling to a five-month low yesterday. Two major Japanese stock indexes jumped more than 9% after falling 12%, while a regional index halted its three-day decline.
Traders took a breather after a day in which almost all risk assets were sold. These sales were driven by growing fears of a US recession. There were also concerns over extreme valuations in the technology sector. A stronger yen prompted a pullback in asset deals. Fears of a sharp contraction were somewhat eased. Data showed the US service sector expanded in July. This expansion followed its worst contraction in four years.
“We don’t think the US or European economies are headed for a hard landing. The wild market moves of the past few sessions offer a buying opportunity. This is our view,” said Mohit Kumar, chief European economist at Jefferies International Ltd.
How the situation evolves will depend on signals from the US economy and the reaction of the Federal Reserve. Traders are rushing to hedge their portfolios. They aim to protect against severe market crashes. These are similar to those seen at the start of the Covid-19 pandemic.
Meanwhile, JPMorgan Chase & Co. warned that the recent weakness in asset trading has not yet appeared. The yen remains one of the world’s most undervalued currencies.
What’s happening in Asian stock markets
Emerging market stocks rebounded in early trading on Tuesday after a sell-off that cost shareholders $1.2 trillion. Stocks in Taiwan and South Korea suffered the most, but managed to partially recoup their losses.
The MSCI Emerging Markets Index rose 1.7% as of 6:30 a.m. in London, its biggest gain in two months. The Taipei benchmark index, which suffered its worst decline since 1967, recovered about a quarter of its losses. Gains in Samsung Electronics Co. and South Korea’s main index helped it achieve a similar rise.
Investors are now betting that the market correction in Asia, especially Japan, has been overdone. However, sentiment remains volatile due to volatile bets on Federal Reserve policy and unpredictable geopolitics.
The collapse “stolen” $927 billion from the total market value of emerging market stocks. It added to the $288 billion loss at the end of last week. That gave the stock its lowest valuation since February at 11.63 times forward earnings.
Meanwhile, currencies of developing countries in Europe, Africa and the Middle East gained. The Israeli shekel rose for the first time in seven days.
How Europe Reacted
European stocks will rise sharply on August 6. This comes as US futures surge after a sell-off that wiped $5.7 trillion off global equity market value.
As of 7:15 a.m. in London, Euro Stoxx 50 futures were up 0.85%, FTSE 100 futures were up 1.3% and DAX futures were up 0.94%.
Global Stock Market Crash on August 5. Here are the top stories.
Dozens of the world’s largest companies have suffered significant financial losses. They have lost hundreds of billions of dollars due to the global stock market crash. The sharp decline was triggered by growing fears of a potential recession in the United States, which is why investors have begun to massively dump securities and other assets
The US stock market opened in the red. Against this backdrop, Nvidia and Apple fell by 14% and 8% respectively. Other companies leading the decline were Microsoft and Citigroup.
Global stock markets suffered
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