Monday saw a sharp fall in the values of stocks and other unpredictable assets, continuing the downward trend from the previous week. A potential recovery in the U.S markets in the afternoon was thwarted by a late decrease in the last hour before the closure of markets.
The significant decreases were spearheaded by Japanese and other Asian markets, with cryptocurrencies, oil and European stock markets taking a hit as well. Subsequently, U.S markets commenced trading on a significantly sour note.
The prevalent factor seems to be the perception that the U.S Federal Reserve was delayed in addressing a flagging economy. Following its most recent meeting, the Fed once more decided to maintain stable interest rates, hinting that a potential reduction may be in place for their September meeting. An alarming decrease in job growth for July, revealed the day after these decisions, sparked concerns regarding a potential recession as the U.S election draws closer.
Republicans, including Donald Trump, leapt upon the deteriorating market values to criticise the Biden administration and Democratic presidential candidate Kamala Harris. The ex-president proclaimed via his social media platform, Truth Social, that voters had to decide between ‘Trump prosperity or the Kamala Crash and Great Depression of 2024.’
There was a brief respite in the afternoon when evidence emerged that showed the vast U.S services sector outperforming projections, shifting from a four-year dip, entered growing territory in July. This momentarily uplifted U.S and European markets, compensating for their morning losses and allowing European markets to end on a positive note.
Daniel Ivascyn, the chief investment officer at Pimco, offered sentiments of positivity after this data was made available. “Today served as a reminder that our economy isn’t on the brink of collapse,” he stated.
However, this temporary recovery took a hit in Wall Street’s final trading hour. Technology stocks were heavily impacted, with AI chipmaker Nvidia dropping by 6.4% and behemoths Microsoft, Apple, Tesla and Alphabet Inc. (Google’s parent company) each losing between 3.3% and 4.8% of their worth.
The trading session ended with the S&P 500 experiencing a decrease of 3 per cent, having initially dropped as much as 4.3 per cent before mid-day, it then managed to reduce the losses to around 1.8 per cent by lunch. The esteemed Dow Jones Industrial Average also saw a decline of 2.6 per cent. The Nasdaq Composite, despite a sharp 6.3 per cent plunge just after the market started, wrapped up the day down by 3.4 per cent.
Bitcoin, the world’s most favoured digital currency, saw its price tumble by 10 per cent, falling to a value of $54,000 (£39,497), its lowest since February. This came after it had rebounded from dropping below the $50,000 mark earlier.
Ethereum, sitting behind Bitcoin as the second most heavily-traded digital token, also experienced a hard hit on Monday with its price nosediving by 15 per cent to $2,400 (£1,752). Stringer coverage was provided by The Financial Times Limited 2024 and Reuters.