Global markets are feeling the pressure as Japanese stocks suffer 20% in just three days. In fact, the U.S. in recession has also put great pressure on the Blackrock market even though signs of recovery are present. The market fears the U.S. recession and the weak reporting for July. This report showed a rise in unemployment to 4.3% and lower job creation than expected.
Despite these fears, some believe they are exaggerated. The jobs report indicates a slowdown rather than a recession, with job creation still strong over recent months. Consumer spending remains steady, and corporate earnings have exceeded expectations. The rapid unwinding of yen carry trades—where investors use low-yield yen to buy higher-yield assets—has added to the market turmoil.
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In Japan, the selloff has been worse than during the 2008 financial crisis, partly due to recent changes in the Bank of Japan’s policy and a stronger yen. This suggests deeper issues in Japan’s market. However, some experts believe that the market reaction may be more about technical factors and investor sentiment rather than worsening corporate earnings. They remain optimistic about Japanese stocks, especially when not hedged against currency fluctuations, as they are still near historic highs.
In recent days, U.S. jobs data triggered market fears of U.S. recession and Japanese stocks suffered their worst three-day stretch ever. In the face of volatility, we lean into risk and our high-conviction ideas. Read more 👉 https://t.co/EuELIqv9b1 pic.twitter.com/IvDQtiNxc0
— BlackRock (@BlackRock) August 12, 2024
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