European markets have opened sharply lower due to global turmoil, with markets extending their sell-off amid growing fears of a recession.
The marketsEuropeans They have opened with sharp fallssince the feeling of risk aversion continues to prevail after the intense selling recorded in the Asian session on Monday.
The French CAC 40 fell 2.78%, the German DAX 2.84% and the FTSE 100 2.19% on Monday morning. However, the euro strengthened against most major currencies, and the Euro/Dollar pair United States rose 2% since Friday past, as it is considered a safe haven currency. For its part, the IBEX was down more than 3% this morning.
The Japanese bags recorded significant declinesdown as much as 10% on Monday, prolonging the sell-off that followed the Bank of Japan’s rate hike last week. The Japanese yen hit its highest level since Jan. 3.
Markets are experiencing panic selling due to softer US economic data, while the Federal Reserve (Fed) remains reluctant to lower interest ratesInvestors are concerned that the Fed is too slow to ease monetary policy to avoid an economic downturn.
On Wall Street, the Three benchmark futures fall sharplywhich points to a further decline when US markets open on Monday. In particular, futures on the technology-heavy Nasdaq fell by 5%.
The safe haven assetssuch as gold, the Japanese yen, the euro and public debt, they went upas investors flocked to safer destinations. In addition, the fear indicatorthe CBOE Volatility Index (VIX), shot up 26% to exceed 23 points, the highest level recorded since March 2023.
Japanese market decline spreads to the whole world
Both Japanese benchmark indexes, the Nikkei 225 and the Topix, fell more than 10%, both placing them in bear market territory, defined as a 20% drop from recent highs. This market plunge came after the Bank of Japan (BOJ) raised rates and took further steps to undo its bond-buying program. These measures triggered a significant appreciation of the Japanese yenas the yen’s carry trade operations against other currencies were reversed.
In addition, the rise in interest rates The crisis has raised fears that Japanese companies, many of which are heavily indebted, will struggle to stay afloat. Investors have sold their holdings on the stock market and converted their cash into yen, anticipating higher returns from rising interest rates.
He Yen strengthened 7% against the dollarreaching its highest level since January, with the USD/JPY exchange rate falling from 154 to just 142.66 at 07:40 Central European Time. Stock market crashes in Japan they have impacted on other regional markets due to the Japanese government’s considerable holdings abroad, especially on Wall Street.
Government bond yields fall, gold rises and bitcoin falls
The Global government bond yields fell sharply due to the prevailing feeling of risk aversionas bonds are often seen as a safe haven in times of crisis. Bond yields move inversely to their price. The main indicator, the 10-year US Treasury yield, plummeted to 3.75%, the lowest level since June 2023. In Asia, the 10-year Japanese government bond yield fell 14 basis points to a four-month low of 0.8%.
The main ones European government bonds could face a similar patternwith German bunds and British gilts experiencing upward pressure. gold prices have gone up close to historical highsas the precious metal is also considered a traditional safe haven asset. Comex gold futures rose 0.73% to $2,487 (2,275 euros) per ounce, just 0.7% from the all-time high reached in July.
On the contrary, the bitcoin has experienced declines in its value, reflecting its status as highest risk asset. The largest cryptocurrency has lost 18% since Friday, standing at $53,400 (49,043 euros) as of 7:40 a.m. Central European Time.
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