US stocks went up on Tuesday after a rough few days. The Nasdaq, Dow Jones, and S&P 500 all ended the day with gains, bringing some relief after sharp drops earlier.
This recovery came after mixed trading in Europe and a big rebound in Japan’s Nikkei 225, which surged 10.2%, its largest one-day jump in points ever, following a significant fall the day before.
The stock market turmoil started on Friday when US job data for July showed a rise in unemployment, causing worries about a possible recession.
Additionally, concerns grew that big tech companies, especially those heavily investing in artificial intelligence (AI), might be overvalued and facing challenges.
On Monday, the market turbulence spread to Europe and Asia, with Japan’s Nikkei 225 falling 12%. However, by Tuesday, global markets showed improvement. The Nasdaq rose 1%, the S&P 500 was up 1%, and the Dow Jones increased by 0.8%.
In London, the FTSE 100 climbed 0.2%, while Germany’s Dax was flat and France’s Cac 40 dropped by 0.3%. South Korea and Taiwan also saw their markets recover by around 3.5%.
Rachel Winter from Killik & Co. mentioned that the market’s problems were like a “perfect storm” of factors, including uncertainty about the US election.
Economists are split on whether the US is heading for a recession, but a downturn could have global consequences. Economist Mohamed El-Erian noted that economic issues in the US affect the world because the US is a major driver of global growth.
There are calls for the US Federal Reserve to lower interest rates to help the economy, but the Fed recently kept rates high. This decision, along with ongoing market volatility, might lead to further fluctuations.
In Japan, stock prices fell due to a stronger yen and rising inflation, which made Japanese goods more expensive for international buyers.
Despite these issues, Jesper Koll from Monex Group Japan remains confident in Japan’s strong economic fundamentals and lack of recession risks.
Credit : BBC
https://www.bbc.com/news/articles/c1d77xe2p26o