Panic is not an investment strategy, don’t let your emotions ruin your Retirement.
10% drops yearly in all asset classes are normal, not just stock, bonds, gold, real estate all drop yearly.
20% drops every 3 years are normal.
35% drop every 10 years are normal.
Now to the News.
Japan's main stock index, the Nikkei 225, saw a significant drop on Monday. While this added to a worldwide market reaction sparked by concerns over a potential U.S. recession, it's important to remember that such fluctuations are a normal part of the market cycle.
Last Friday, a report revealed that U.S. employers hired fewer people than expected, surprising the markets and cooling the excitement that had recently driven the Nikkei 225 to a high point.
Just days before, U.S. stock indexes had risen after the Federal Reserve hinted at possible rate cuts in September. However, Friday's jobs report raised concerns that the Fed may have kept its interest rate high for too long, potentially leading to a recession. While lower rates make borrowing cheaper, they take time to impact the economy positively.
Tan Boon Heng from Mizuho Bank in Singapore highlighted that the main concern is higher unemployment leading to reduced spending and further economic challenges.
The U.S. markets reacted sharply on Friday to the weak jobs report. The S&P 500 dropped some, the Nasdaq Composite fell more, and the Dow Jones decreased a bit. The negative trend continued into Monday, with Nasdaq futures down a lot and S&P 500 and Dow futures down some.
Dan Ives from Wedbush Securities noted that the Nikkei's drop caused significant market turbulence, impacting U.S. markets as well.
Investors are now looking to U.S. services sector data due later Monday to determine if the global selloff was an overreaction, according to Yeap Jun Rong of IG.
Despite the current concerns, the U.S. economy continues to grow, and a recession is not a certainty. Until Friday, markets had remained relatively stable over the past year, buoyed by enthusiasm around artificial intelligence technology and the prospect of interest rate cuts. However, some experts caution that uncertain times may still be ahead.
On Monday, the Nikkei closed down a lot of points. It had dropped some on Friday, marking its worst two-day decline ever. Stocks in Korea and Taiwan also fell as investors retreated from AI-focused companies, wary of overhyped expectations.
European markets also opened lower on Monday, with Germany's DAX, the CAC 40 in Paris, and London's FTSE 100 all falling.
Since the Bank of Japan raised its interest rate on Wednesday, share prices in Tokyo have fallen, with the Nikkei now down some from a year ago. The Japanese yen also fell sharply.
The euro rose a bit.
Stephen Innes from SPI Asset Management commented that the current market volatility reflects investor nervousness. The key question now is whether traditional market strategies can overcome fears of a sudden recession.
While market fluctuations can be unsettling, they are a regular occurrence. It's crucial to stay calm and avoid making hasty portfolio changes based on short-term market movements. The broader economic context and long-term trends often provide a more balanced perspective.
General informational content only. Not tax, legal, or investment advice. Consult a financial professional before making investment decisions. Conduct due diligence.All investments involve risk, including potential loss of principal.
Comments