$3 Trillion Evaporates from Global Markets as Stock Indices Plummet

$3 Trillion Evaporates from Global Markets as Stock Indices Plummet
August 6, 2024, 1:47 am

Money Market

$3 Trillion Evaporates from Global Markets as Stock Indices Plummet

The sharp decline in global markets reflects a state of financial panic, raising fears of a repeat of the 2008 global financial crisis.

International financial markets have wiped out more than $3 trillion in market value due to massive losses at the start of the trading week. The fear index soared to its highest levels in four years, surpassing 120% compared to last Friday.

The Nikkei 225 index in Japan recorded the largest drop, with its worst daily performance since 1987, resulting in a loss of approximately $620 billion in market value, according to estimates by "Al Arabiya Business." This does not include all Japanese stocks, which also suffered significant losses.

Additionally, the MSCI Emerging Markets Index incurred losses of $504 billion, while the Stoxx 600 European Index saw losses exceeding $300 billion.

As American markets opened with losses, the extent of the losses expanded significantly, with American markets adding over $2 trillion in losses. The market value of the world's top 9143 companies dropped to $101.8 trillion, down from $103.8 trillion at the start of American market trading.

Estimates by "Al Arabiya Business" do not cover all global markets, so the figure could increase. What is certain is that the current stock losses are the greatest since the COVID-19 pandemic and could approach levels seen during the 2008 global financial crisis.

In this context, Michel Salibi, Senior Market Analyst at FXPro, stated that international financial markets are experiencing a state of panic and severe liquidation of stocks and cryptocurrencies, attributed to two main reasons.

In an interview with "Al Arabiya Business," he said there is growing concern over "carry trade" operations since last week following an interest rate hike in Japan, despite the yen falling to levels of 143 yen to the dollar.

He explained that financial markets had reached high levels, prompting investors to withdraw and turn to the US Treasury bond market, especially ten-year bonds. He noted that American employment data exacerbated market fears last Friday.

He added, "I do not see any signs of an economic recession or an urgent intervention by the US Federal Reserve to lower interest rates, and there are indications of a potential 50 basis point cut in September."

He confirmed that he does not expect a change in market direction despite the more than 10% drop in stock markets, and that the declines are considered natural after a strong rise in previous periods, particularly for technology stocks.

Levant News

Resignation and Escape of Bangladesh's Prime Minister After Protesters Storm the Palace Four Hezbollah Fighters Killed in Israeli Airstrike