Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Wednesday, August 21, 2024
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

A global stock sell-off is deepening with investors fleeing to safe havens

August 5, 2024
in News
Reading Time: 5 mins read
A A
A global stock sell-off is deepening with investors fleeing to safe havens
0
SHARES
ShareShareShareShareShare

READ ALSO

Ukraine carries out one of largest-ever drone attacks on Moscow

Volatility spike was a ‘huge overreaction,’ but more could be ahead, strategist says

A man looks at an electronic boarddisplaying stock prices of the Nikkei 225 listed on the Tokyo Stock Exchange in Tokyo on April 30, 2024. 

Kazuhiro Nogi | Afp | Getty Images

Investors on Monday turned to safe-haven assets as a global stock sell-off deepened, following weaker-than-expected U.S. jobs data at the end of last week.

The disappointing jobs report spurred investor fears that the Federal Reserve made a mistake last week when it kept interest rates unchanged, and that the world’s largest economy is headed toward a recession.

The stock sell-off has also been exacerbated by volatility in some of the major earnings and a more hawkish Bank of Japan, which has led to speculation that the popular yen “carry trade” has imploded over a short-term basis. A “carry trade” takes place when an investor borrows in a currency with low interest rates, such as the yen, and reinvests the proceeds in a currency with a higher rate of return.

A global stock sell-off is deepening with investors fleeing to safe havens

On Monday, the Swiss franc strengthened 1.7% against the dollar to trade at 1.186 against the greenback, hitting its strongest level since January this year.

U.S. Treasury yields, which move inversely to prices, extended their fall. At 9:30 a.m. ET, the yield on the 10-year Treasury was down roughly 11 basis points to 3.685%. The 2-year Treasury yield was last trading at 3.742%, down more than 12 basis points. The yield on Japan’s 10-year government bond, meanwhile, plunged 21 basis points to 0.741%.

The buying was in sharp contrast to the selling seen in the stock markets. U.S. stocks fell on Monday, with the Dow Jones Industrial Average falling more than 1,100 points, or about 3%. The Nasdaq Composite sank 5%, while the S&P 500 dropped 3.8%.

Japan stocks confirmed a bear market in Asia overnight. The 12.4% loss on the Nikkei, which brought it to close at 31,458.42, marked the worst day for the index since the “Black Monday” of 1987. The loss of 4,451.28 points on the index was also the largest decline in terms of points in its entire history.

In Europe, the regional Stoxx 600 index was 3.3% lower, with all sectors and major regional bourses trading in the red. Tech stocks shed as much as 5% before paring losses slightly to trade down 4%.

Don't see anything that has changed to indicate the 'death of the stock rally': CIO

What is driving losses?

While U.S. recession fears appeared to trigger the start of the sell-off last week, Peter Schaffrik, global macro strategist at RBC Capital Markets, said wider factors should not be overlooked.

“When you look at the labor market report in a bit more detail, I think there are some legitimate concerns about whether it was actually as weak as it as it was stylized,” Schaffrik told CNBC’s “Squawk Box Europe” on Monday. Schaffrik added that the totality of recent U.S. data would still most likely lead the Federal Reserve to cut rates by 25 basis points in September, rather than opting for a bigger trim.

Schaffrik went on to say that the big movements in the yen should not be overlooked, while equity market wobbles are reinforcing further developments as investors scrabble to reposition.

“We are in a position now where the market moves create market moves,” Schaffrik said.

“When you look at people who have some kind of positions on, those positions then get lopsided, because the market moves in the other direction. If they move in these magnitudes, on top of that you have [volatility] spiking, you’ve got a significant [value at risk] shock.”

The Vix index — a measure of market volatility — leapt to its highest level in four years on Monday.

Schaffrik continued: “That forces people to take down their positions overall. And obviously, they have to sell into a falling market already, or have to buy into a rising market in the case of Treasurys. And that then reinforces itself.”

Valuation correction

Ted Alexander, chief investment officer at BML Funds, said that the current volatility in markets has “been a long time coming,” and that it was not a reason to panic.

“Everyone’s been expecting it for a while, [it’s] great for active managers,” he told CNBC via email, adding that the shake up may actually bring equity investors back if stocks offer better value.

“Stock markets aren’t cooked yet. Don’t abandon some exposure to tech and growth,” Alexander said.

George Lagarias, chief economist at Forvis Mazars, shared a similar view in a note on Monday.

Stock and bond market moves are “not due to an impending [U.S.] recession. Stocks are naturally correcting and bonds are rising due to worse-than-expected macroeconomic data,” Lagarias said.

Rather than an equity sell-off presenting a case for a broad market re-rating, the detail of stock movements indicate some spillover from the yen carry trade, a partial unwinding of the AI trade, a re-rating of the tech sector and some profit-taking after a long period of high valuations, Lagarias argued.

“Assuming that the Fed acts quickly enough so that a risk assert correction doesn’t threaten an actual recession, a further correction could thin out the market and allow investors to re-deploy cash at more reasonable valuations,” he said.

— CNBC’s Sarah Min and Lim Hui Jie contributed to this report

Credit: Source link

ShareTweetSendSharePin
Previous Post

How AI is Shaping Customer Interaction with Food Brands

Next Post

Echoes of Wisdom footage features cute horseback riding and uh, smoothie shops

Related Posts

Ukraine carries out one of largest-ever drone attacks on Moscow
News

Ukraine carries out one of largest-ever drone attacks on Moscow

August 21, 2024
Volatility spike was a ‘huge overreaction,’ but more could be ahead, strategist says
News

Volatility spike was a ‘huge overreaction,’ but more could be ahead, strategist says

August 21, 2024
Japan trade on deck, Wall Street rally pauses
News

Japan trade on deck, Wall Street rally pauses

August 21, 2024
GMC targets electric truck leadership against Tesla, Ford, Rivian
News

GMC targets electric truck leadership against Tesla, Ford, Rivian

August 21, 2024
Brits snap up lower mortgages as BOE cut boosts market
News

Brits snap up lower mortgages as BOE cut boosts market

August 20, 2024
Eli Lilly weight loss drug cuts risk of developing diabetes in trial
News

Eli Lilly weight loss drug cuts risk of developing diabetes in trial

August 20, 2024
Next Post
Echoes of Wisdom footage features cute horseback riding and uh, smoothie shops

Echoes of Wisdom footage features cute horseback riding and uh, smoothie shops

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Japan’s tourist surge is a headache for luxury brands

Japan’s tourist surge is a headache for luxury brands

August 1, 2024
‘Never quit your job, get laid off’

‘Never quit your job, get laid off’

August 4, 2024
Researchers uncover how narcissistic CEOs get their way

Researchers uncover how narcissistic CEOs get their way

July 23, 2024
How to watch men’s golf 2024 Olympics: Schedule, live streaming

How to watch men’s golf 2024 Olympics: Schedule, live streaming

August 1, 2024
Blue screen of death outage affected around 8.5 million devices

Blue screen of death outage affected around 8.5 million devices

July 22, 2024
Morgan Stanley exec, entrepreneur’s teen daughter missing after tornado at sea

Morgan Stanley exec, entrepreneur’s teen daughter missing after tornado at sea

August 20, 2024
Biden drops out of 2024 presidential election against Trump

Biden drops out of 2024 presidential election against Trump

July 22, 2024

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • France to donate 100,000 mpox vaccines as nation prepares for outbreak at home
  • Ukraine carries out one of largest-ever drone attacks on Moscow
  • Aaron Boone on how Yankees’ catching situation will play out down stretch
  • Yankees’ DJ LeMahieu in another rut as porous season continues

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In