Global stock market 'Black Monday'

Global stock market ‘Black Monday’

Global stock market had a ‘Black Monday’ on the 13th (local time) amid the central bank’s high-strength monetary tightening outlook and fears of a recession.

Nasdaq 4.7% ↓ on Fed’s ‘giant step’ concerns… S&P 500 enters bear market

European and Asian stock markets also fell 2-3%… Bitcoin 17% due to cryptocurrency dumping↓

After the stock markets of major Asian and European countries recorded sharp declines of 2-3% at once, the Standard & Poor’s (S&P) 500 index, representing the New York Stock Exchange, officially entered a bear market.

The Nasdaq index, centered on technology stocks, plummeted by nearly 5%, and cryptocurrencies, a representative risky asset, returned to the level a year and a half ago with a double-digit decline.

Dow, 500P or higher for the first three days in a row↓… S&P 500 retreats to March of last year

The Dow Jones Industrial Average of the New York Stock Exchange closed at 30,516.74 on the same day, down 876.05 points (2.79%) from the previous day.

It is the first time in history that the Dow has fallen more than 500 points on three consecutive trading days, MarketWatch reported.

The Standard & Poor’s (S&P) 500 index plunged 151.23 points (3.88%) to close at 3,749.63, down more than 21% from its previous high on January 3 (4,796.56).

With this, the S&P 500 has officially entered a bear market with a decline of more than 20% from its previous high.

On the 20th of last month, the intraday price fell by more than 20% from its previous high for a while, but it is the first time since March 2020, the early stage of the novel coronavirus infection (COVID-19), that it has met the bear market criterion based on the closing price.

The index not only broke a new low, but also retreated to the lowest level since March of last year.

The Nasdaq Composite fell 530.80 points, or 4.68%, to close at 10,809.23.

Major indices partially recovered from their losses in the afternoon, but before the close of the market, the Fed held a ‘giant step’ (a 0.50 percentage point hike in interest rates at a time) rather than a ‘big step’ at the Federal Open Market Committee (FOMC) meeting on the 14th and 15th. As the Wall Street Journal (WSJ) reported that it would consider an interest rate hike by 0.75 percentage points at a time, the downward curve steepened again.

Recently, investors are in the mood to withdraw from risky assets after the US Consumer Price Index (CPI) rose 8.6% in May announced on the 10th, the largest record in 40 years since December 1981.

This is because the extent of the Fed’s rate hike is likely to increase in an attempt to tackle uncontrollable inflation.

Accordingly, the 10-year US Treasury yield surged more than 20bp (0.20%, 1bp = 0.01% points), the highest one-day rate since March 2020, breaking the intraday high of 3.37%.

In the aftermath of interest rates, interest rate-sensitive tech stocks such as Tesla (-7.1%), Nvidia (-7.8%), Netflix (-7.2%), Alphabet (-4.3%) and Microsoft (-4.2%) plunged all at once.

In addition, as warnings of a recession on Wall Street and academia continued, not only tech stocks but also the stock market showed a downward trend in all directions.

Boeing fell 8.7%, Carnival Corporation (Cruise Lines) fell 10.3%, and Delta Air Lines fell 8.3%, respectively.

Global stock market ‘Black Monday’. A sharp drop in Europe, a drop of around 4% in the US (comprehensive)

Europe and Asia are also ‘fallen leaves’… Eurostocks 2.7%↓, KOSPI 3.5%↓

The stock markets of major European and Asian countries, which opened earlier than the US, also did not escape a sharp decline.

The London Stock Exchange’s FTSE 100 index closed at 7,205.81, down 1.53% from the previous day.

Germany’s Frankfurt Stock Exchange’s DAX30 index fell 2.43% to 13,427.03, and the Paris Stock Exchange’s CAC40 index fell 2.67% to close at 6,022.32, respectively.

The pan-European Euro Stoxx 50 index fell 2.69% to close at 3,502.50.

Major European stock markets continued their decline of more than 2% on the day, the lowest level since March of last year, Bloomberg News reported.

Inflation in the US and fears of monetary tightening by the Fed are analyzed to have fueled investor fears in Europe as well.

Earlier, stock markets in major Asian countries also plunged on fears of the Fed’s aggressive rate hike and stagflation (inflation rises amid economic recession).

According to Bloomberg News and the Wall Street Journal (WSJ), the average stock price of Japan’s Nikkei 225, Korea’s KOSPI, and Hong Kong’s Hang Seng Index fell by more than 3%.

Korea’s KOSPI plunged 3.52% and KOSDAQ 4.72%, respectively, while Japan’s Nikkei 225 and Topix index fell 3.01% and 2.16%, respectively.

Cryptocurrency is also a ‘season of trials’… Bitcoin once collapsed at $23,000

The virtual currency market, which recently showed a trend similar to that of tech stocks, collapsed further as the sell-off phenomenon accelerated.

According to CoinDesk, Bitcoin, the “leader” of cryptocurrency, once plunged 17% from 24 hours ago to $22,764, breaking the $23,000 level.

After making up for the decline, Bitcoin is trading at $23,200, down 15% from the previous day, as of 5 pm.

This brings the Bitcoin price back to its lowest level in a year and a half since December 2020.

Ethereum, the second-largest cryptocurrency, is also trading at $1,200, down more than 16% from 24 hours ago.

As a result of the crash, the total market capitalization of cryptocurrencies fell below $1 trillion for the first time in a year and five months, CoinMarketCap said.

According to CNBC, the total market capitalization of cryptocurrencies has evaporated by more than $200 billion in just three days from the weekend to this morning, Monday.

It is analyzed that the cryptocurrency sell-off has influenced not only macroeconomic factors such as inflation and the Fed’s interest rate hike, but also internal problems such as the suspension of withdrawals of cryptocurrency loan platform Celsius.