Disappointing jobs data and economic concerns
Summer heat isn't the only thing rising; market heat is scorching too. The latest jobs data has been disappointing, with the U.S. economy adding only 114,000 jobs last month, with unemployment level rising to a year-to-date high of 4.3%. Meanwhile, U.S. Federal Reserve opted to keep the interest rate unchanged in August, reflecting a cautious approach amidst ongoing economic uncertainty.
Additionally, on the Asian markets – Japan saw a moment of uncertainty due to its current change in interest rate levels affecting broader market and trades.
Market volatility and global economic impact
The VIX—a key measure of market risk and investor sentiment—reached a intra-date high of 61 as of August 5th. This surge underscores the growing fear and uncertainty among investors, who are increasingly wary of potential market downturns.
Source: https://finance.yahoo.com/quote/%5EVIX/
The U.S. market entered correction territory, marked by significant declines in major indexes. The DJI dropped 2.56% in the opening hours of August 5th, followed closely by the NASDAQ, which fell 4.31% on a day-to-day basis due to fears of a tech rout. Like the VIX, these declines signal investor concern about the sustainability of tech stock valuations and broader market health.
Asian markets are also feeling the heat. Japan's Nikkei 225 fell a staggering 12.40%, posting the highest single day loss since 1987. European markets have not been spared either, with major indexes across Europe falling by around 2%. This broad-based decline indicates a pervasive sense of economic unease extending beyond U.S. borders.
Path to recovery
Amidst this turbulence, U.S. Treasury yields have experienced a slight decline. This pivot could be a silver lining for borrowers and the housing market, as lower yields generally lead to reduced borrowing costs.
As of now the markets look in a recovery mode from the multitude of volatility spikes, and continues to trend upwards globally.
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About the Author:
Kinjal Shukla is the Index Researcher and Data Engineer at MarketVector. She is responsible for the design and development of MarketVector indexes and for creating data infographics. Kinjal has cleared FRM Level 1 having come from a risk profile in Barclays, India. She has a degree in a Master of Science in Financial Engineering from Stevens Institute of Technology, USA, and an MBA-Tech degree from NMIMS-MPSTME University, India.
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