Markets: From Collapse to Rebound. Nikkei Surges by 10%, Is the Storm Over?

Is the Market Panic Over?

After the turmoil on Monday, August 5th, it seems that the panic in the markets has subsided and they are rebounding today.

Japan’s Recovery

The standout performer is Japan, with the Nikkei surging over 10%, recovering from Monday’s close of 31,458.
The index had plunged 12.4% in the previous session, marking its worst sell-off since the infamous Black Monday in 1987.

Global Market Recap

Overnight in the United States, both the Dow Jones and the S&P 500 experienced their worst sessions since September 2022.
The Dow dropped 1,033.99 points, closing 2.6% lower, while the S&P 500 slid 3%.
The Nasdaq Composite also lost 3.43%, down 15% from its closing peak.

During today’s Asian session, however, Wall Street showed a more stable performance, with S&P 500 futures up 1.5%, Nasdaq futures rising 2%, and pan-regional Euro Stoxx 50 futures growing by 1.24%.

Market Recovery and Caution

Despite the bounce back in markets, uncertainties linger.
Analysts and investors are carefully observing the current situation, unsure if Monday’s violent swings mark the end of a global sell-off or the beginning of a prolonged crisis.

The pillars that supported financial market gains for years have been shaken, with approximately $6.4 trillion wiped out from global stock markets in just three weeks.
Speculations about an imminent US recession, fading AI euphoria, and a strengthening yen disrupting carry trades have led to three days of global stock sell-offs.

While markets have rebounded today, Wall Street’s “fear gauge”, the VIX, remains elevated, indicating that risky assets could face obstacles amid ongoing economic uncertainty.
Federal Reserve officials, such as San Francisco Fed President Mary Daly, are working to calm the panic and reassure markets.
Daly expressed readiness to cut interest rates if needed, stressing the importance of proactive policy measures.

Experts and traders remain cautious, anticipating further market volatility.
The outlook is uncertain, with concerns about the global economy and geopolitical risks persisting.
The road ahead remains challenging, and the possibility of further market turbulence cannot be ruled out.