Stock markets likely to continue downward trend

The stock markets are likely to continue their downward trend Keystone-SDA

The global financial markets started the week deep in the red, threatening a week of stock market turbulence. In Asia, last week's sell-off is continuing: Japan's Nikkei is currently down more than 8%.

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Opening losses are also on the cards for the other stock markets. Broker IG is currently calculating a drop of 1.0% for the SMI at the start of trading. The German Dax, for example, is estimated to be more than 1% lower and US futures are also currently pointing to a weak start to trading.

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Meanwhile, the flight to safe havens such as the Swiss franc continues on the currency markets. In the morning, the euro/Swiss franc pair fell to 0.9281 at times. The last time the currency pair traded this low was at the beginning of the year. The cryptocurrency Bitcoin, on the other hand, is currently at its lowest level since February. And with its jump last Friday, the volatility index VSMI is now also at heights last seen last October.

The global financial markets already closed last week with significant losses. For example, the SMI recorded losses of 3.6% on Friday – its biggest daily drop since January 2022. In Japan, the Nikkei had already slumped by 6% on Friday and the stock markets in the USA also closed weaker again – with the technology index Nasdaq 100 even at its lowest level since mid-May.

This was triggered by the rapidly deteriorating US economic data. From the second half of the week onwards, they have conjured up fears of recession in the USA, which have led to a broad-based sell-off on the stock markets.

The fact that US Fed Chairman Jerome Powell signaled a turnaround in interest rates for September last Wednesday is of little help. Cautionary voices are wondering whether the US Federal Reserve might not have waited too long to cut interest rates.

Translated from German by DeepL/mga

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