Global markets are facing fresh volatility and losses as concerns about the US economy ripple through Asia-Pacific markets. The Nikkei 225 in Japan has tumbled by almost 10%, triggering circuit breakers to curb panic selling. Other markets in the region, such as South Korea and Australia, are also experiencing significant losses. This follows last week’s selloff caused by various events like a surprising interest rate hike by the Bank of Japan, weak US economic data, and disappointing financial results from tech companies.
The fear in the markets is evident in Wall Street’s “fear gauge”, the Vix index, which has seen a jump as investors try to navigate the uncertainty. Analysts are predicting further losses in Europe and on Wall Street as concerns about a potential recession and the impact of trade tensions continue to weigh on investor sentiment.
In the UK, the FTSE 250 index of smaller companies is also struggling, with John Wood Group shares plummeting after a failed takeover attempt due to rising geopolitical risks. Additionally, the eurozone economy has stalled in July with the composite PMI Output Index falling to a five-month low.
Investors are now pricing in more UK interest rate cuts, with interest rate futures fully pricing in two quarter-point Bank of England rate cuts by December. This uncertainty in the markets is expected to continue as economic and political uncertainty, including the upcoming US election, adds further pressure.
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