Global stock markets collapse

Is the Bull Market Over?

On Monday, global stock markets faced a significant decline, with Japan's Topix index plummeting by 12.2%—marking its worst day since "Black Monday" in 1987. This sharp drop wiped out all the year's gains.

Similarly, the Nasdaq Composite and S&P 500 experienced notable losses, falling by 3.7% and 3.1%, respectively.

The Vix index, commonly referred to as Wall Street's "fear gauge," soared above 65 points, reaching its highest level since the beginning of the COVID-19 pandemic in 2020. This increase reflects growing anxiety and expected volatility in the stock market.

Why are global financial markets collapsing?

- First, last Friday’s US jobs report  (Non farm payrolls) has ignited fears of a recession and raised concerns that the Federal Reserve has delayed cutting interest rates for too long.

- Second, the unwinding of the "yen carry trade," a global currency and bond strategy utilized by major financial institutions, is causing intense selling pressure worldwide (the Nikkei fell by 12% on Monday).

The ripple effects from Japan's market sell-off demonstrate the profound interconnectedness of global economies. Movements in one major market can swiftly impact others, emphasizing the need for coordinated international financial policies and strategies.

- Third, the increasing likelihood of a full-scale conflict between Israel, Lebanon, and/or Iran is heightening investor anxiety.