Global Stock Markets Crash: Japan’s Nikkei, Taiex Tumbles 12%| Dow Jones, S&P, Nasdaq, Sensex, Nifty

#stockmarket #marketcrash #nikkei225 #indianstockmarket

Investors worldwide are witnessing a global stock market crash in 2024.

Nikkei 225, a leading index of Japanese stocks closed the day down by 12.4% on Monday. The Taiex, the weighted index on the Taiwan Stock Exchange, was down 12% Dow Jones Industrial Average futures fell by 444 points, or 1.1%. S&P 500 futures and Nasdaq futures dipped 3% and 5.5% each.

The recent sharp decline is part of a larger global stock market meltdown triggered by events of the last week, the US Fed keeping the funds rate unchanged, the Bank of Japan raising rates and escalating tensions in the Middle East.

Several key factors have contributed to this downturn.

US Economic Concerns: Underlying the market turbulence are growing fears about the stability of the US economy. The recent stock market decline comes on the back of poor jobs data, which raised investor concerns that the Federal Reserve could have made a mistake by leaving interest rates unchanged last week and that the economy is headed for a recession.

Fed Chair Jerome Powel hinted at a September rate decrease during a news conference earlier last week, but a sharp downturn in the labour market has raised questions. Recent economic data from the US has been troubling.

For instance, unemployment rates have risen to their highest level since October 2021, hitting 4.3%. According to data released on Friday, the US economy added only 114,000 jobs in July, significantly less than market projections of 175,000. This unexpected rise in unemployment has fueled fears that the US economy might be heading toward a recession. Such fears have a global impact.

Tech Sector Weakness: The tech sector, a major component of modern stock markets, has been experiencing significant volatility. Tech Stocks have soared this year in a rally fueled by excitement over artificial intelligence technology.

Selloffs after disappointing earnings from tech-focused companies such as Amazon, Alphabet, and Intel, exacerbated concerns that stocks may have become too richly valued. Leading US tech stocks have seen sharp declines, which has had a domino effect on other markets, including Japan. The tech selloff is driven by various factors, including concerns over high valuations, regulatory pressures, and broader economic uncertainties.

Negative investor sentiment: Investor sentiment has turned notably pessimistic due to uncertainties surrounding economic policies and potential future actions by central banks, particularly the US Federal Reserve. Speculations about further interest rate hikes to combat inflation have added to the market jitters. Higher interest rates can lead to higher borrowing costs and slower economic growth, factors that typically weigh heavily on stock markets. This coupled with escalating geopolitical tensions in the Middle East, with a possibility of a spill-over to other oil-rich countries, has jolted investor confidence.

In terms of daily points fall, the Nikkei witnessed a record decline. The 12.4% loss on the Nikkei was the worst day for the index since the “Black Monday” of 1987. Among other Asian markets, South Korea’s Kospi plunged 8.1% before trading was halted for 20 minutes. The sentiment was echoed across Asian and global markets.
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