Stock markets in Europe and Asia are seeing their prices fall on Monday, August 5. After a difficult day on Wall Street on Friday, Asian stock markets plummeted at their opening this morning. The leading Nikkei index in the Japanese capital, which had already fallen 5.8% on Friday, plunged 12.4% at the close, experiencing the biggest drop in points in its history. The broader Topix index collapsed 12.23%. Taiwan fell more than 8%, as did Seoul. This is its biggest decline since “Black Monday” on October 20, 1987, according to data from the London Stock Exchange Group cited by Reuters. The plunge is such that it has triggered a trading restriction for the first time in four years.
Chinese stock markets were down more moderately, with Hong Kong’s Hang Seng index dropping 2.13% in recent trading. The Shanghai Composite Index fell 1.54% and the Shenzhen Composite Index 1.85%. In Europe, the main stock indices fell as soon as they opened on Monday and at around 7:25 a.m., Paris was down 2.42%, London 1.95%, Frankfurt 2.49%, Amsterdam 3.05%, Milan 3.31%, Zurich 2.97% and Madrid 2.79%.
Why such a fall?
The collapse of the Tokyo Stock Exchange comes after a weekend marked by the publication of degraded macroeconomic indicators which revived fears of recession in the United States, the daily analyses. The echoes. “The trigger: a US jobs report” published on Friday, which sent “stocks and bond yields” on Wall Street down, commented Stephen Innes, analyst at SPI Asset Management, to Agence France Presse. In detail, in the United States, the US unemployment rate in July rose more than expected to 4.3% from 4.1%. This is the highest jobless rate since October 2021.
“What we’re seeing now is a situation where the market is looking at what’s happening in the U.S. macroeconomy as a recession checkbox,” Robert Carnell, head of Asia-Pacific research at ING, told Reuters. “We’ve gone from inflation falling fast enough and the Fed easing in September to an economy that’s going off the rails and the Fed is not going to be able to stop the situation from getting worse.” Bond yields fell sharply in the wake of the report, suggesting the Fed could cut rates more drastically than expected.
What consequences?
This monetary tightening after years of negative rates, combined with a slowdown in American economic activity, has notably precipitated the rise of the yen, supported by interventions by the central bank of Japan on the foreign exchange market. However, this exchange rate movement is negative for Japanese exporting companies that had benefited from the fall of the Japanese currency. On the foreign exchange market, the dollar fell by 2.17% on Monday morning, and the euro by 1.99%. While bitcoin plummeted by 11.70%.
Bank stocks also fell sharply. In Japan, Mitsubishi UFJ Financial Group fell by 13.5%, Sumitomo Mitsui Financial Group (SMFG) by 14.6%, Mizuho by 12.8% and Nomura by 18.59%. In Europe, UniCredit fell by 6.54% and Intesa Sanpaolo by 5.57% in Milan, Deutsche Bank by 5.12% in Frankfurt, Société Générale by 5.05% in Paris, Barclays by 5.08% in London. The technology sector also sank into the red: in Amsterdam, ASML lost 4.46% and BE Semiconductor Industries by 5.17%. In Frankfurt, Infineon lost 2.34%. In Paris, STMicroelectronics fell by 5.10% and Capgemini by 2.93%.