Today’s data is based on what happened in the stock markets (markets and international context) a few days ago (in addition to the unemployment data from the United States). The Japanese government has sent a message of calm after the stock market crash on Monday, where the benchmark Nikkei index recorded its second largest drop in history, of 12.4%.
This figure is added to the 17.6% loss of the Japanese stock market in the last 5 days, which has already lost more than 10,000 points in 16 trading days, almost half (4,451.28) on Monday alone, all of this since it reached a record close of 42,224.02 units on July 11.
But you have to look at the last three decades, as Japan has maintained 0% interest on its currency. Borrowing the Japanese Yen was almost free. So for 30 years, investors have borrowed the Yen at 0% and invested it internationally, especially in the Nasdaq and NYSE. So the move by the Bank of Japan to raise that 0.25%, which nobody expected, has made investors believe that free money was no longer such, so many investments are now returning to Japan.
What has happened to the IBEX 35
The Spanish stock market opened on Monday with a sharp fall of 2.57%, which puts it below 10,400 points, after the collapse of the Asian markets. The accumulated gains for the year are reduced to 2.81%.
The Spanish index could fall for the fourth time in a row on Monday, amid market fears of a US recession that could lead the Federal Reserve (FED) to further lower rates.
Last Friday, the IBEX 35 ended with a fall of 1.67%, which placed it at April levels, and ended the week with a cumulative decline of 4.4%, the largest since March 2023.
What has happened in the rest of the stock markets
In Europe, minutes after the opening, Milan was down 3.8%, Frankfurt 3%, Paris 2.7% and London 2.4%.
Seoul fell 8.77% and Taiwan 8.35%. The Hong Kong and Shanghai stock exchanges also traded in the red, although with more moderate losses.
On Friday, the Dow Jones lost 1.51% on Wall Street, the S&P 500 lost 1.84% and the Nasdaq lost 2.43%. Bitcoin lost more than 10% this morning and Ethereum lost 13%.
The opening of the US stock market was also negative. The Dow Jones Industrial Average began the session with a 1.7% drop, and within a few minutes of opening its fall had widened to 3.06%, while the Nasdaq technology index plummeted by 6.3% at the start of the day, although it managed to reduce its losses to just over 3%.
Investors fear the US Federal Reserve has taken too long to act and the first rate cut in September will tip the US economy into recession.
VIX or the ‘Fear Index’
The so-called fear index, VIX, has soared by more than 60% since this morning and is now trading above 30 points, approaching data from spring 2020, when the pandemic began.
The VIX is a real-time Volatility Index created by the Chicago Board Options Exchange (CBOE). This index was the first benchmark to quantify market expectations regarding volatility. However, the index is forward-looking, meaning that it only shows the implied volatility of the S&P 500 (SPX) over the next 30 days.
“The VIX is calculated using the SPX index option prices and is expressed as a percentage. If the value of the VIX rises, the S&P 500 is likely to fall, while if the value of the VIX falls, the S&P 500 is likely to remain stable,” says IG Group.
The importance of the SMI
All eyes are now on the ISM index of activity in the services sector in the American country, an indicator that takes on special importance in the current situation.
He ISM (Institute for Supply Management) is a non-profit association with more than 50,000 members worldwide. Its function is to research and produce reports for its members as well as offer them education and advice.
The ISM PMI is such a powerful indicator that it has been able to maintain itself as an efficient tool for measuring the US economy since its first appearance in 1948. The ISM produces two PMI indices, one for the manufacturing sector and the other for the non-manufacturing sector, based on surveys of hundreds of private and public companies from a total of 18 industries in the United States.
Related news
The latest reading was 48.80, and it is expected to rise to 51 points. “If it falls below 50, it would be the second consecutive month in contraction zone and would warn of clear dangers in the economy,” says economic expert Héctor Chamizo.
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