"Fear gauge" jump causes +$3 trillion loss in global stock markets
Shafaq News/ On Monday, global stockmarkets experienced a significant downturn, with losses exceeding $3 trillionas trading commenced for the week.
The "fear gauge", WallStreet's most-watched gauge of investor anxiety, jumped to its highest level infour years, rising over 120% compared to last Friday, as traders scrambled tohedge against market volatility during a global selloff fueled by US recessionfears.
According to Al-Arabiya Business,the Japanese Nikkei 225 index saw the largest decline, recording its worstdaily performance since 1987, with a loss of approximately $620 billion inmarket value. This figure does not encompass all Japanese stocks, many of whichalso suffered losses.
The MSCI Emerging Markets Index lost$504 billion, while the European Stoxx 600 Index dropped more than $300billion.
As US markets opened with losses,the extent of the declines expanded significantly. US markets alone contributedto a drop of over $2 trillion, reducing the total market value of the largest9,143 companies worldwide to $101.8 trillion, down from $103.8 trillion at themarket open.
The figures reviewed by Al-ArabiyaBusiness do not account for all global markets, suggesting the total lossescould be even higher.
Current losses are the largest sincethe COVID-19 pandemic and are approaching the scale of the 2008 globalfinancial crisis.
In this context, Michel Sleibi,Chief Market Analyst at FXPro, stated that global financial markets areexperiencing heightened fear and a severe sell-off in both stocks andcryptocurrencies, driven by two main factors.
He explained in an interview withAl-Arabiya Business that increased concerns about "carry trades"emerged following last week's interest rate hike in Japan, despite the yen'sdecline to levels of 143 yen per dollar.
Sleibi noted that stock markets hadreached high levels, prompting investors to exit and shift towards US Treasurybonds, particularly 10-year bonds.
He also mentioned that US employmentdata intensified market panic last Friday.
Sleibi added, "I do not foreseeany immediate economic recession or emergency intervention by the FederalReserve to cut interest rates, although there are indications of a 50 basispoint cut in November."
He concluded that a change in marketdirection is unlikely unless stock markets fall by more than 10%. Such declinesare considered natural following recent strong gains, particularly intechnology stocks.
