By D. Maan, Jadetimes News
US Stocks Higher at Open as Market Volatility Continues
Stock markets in the United States opened higher on Tuesday, placing some calm into the recent turbulence. The Nasdaq, Dow Jones Industrial Average, and S&P 500 all notched early gains after several days of wild trading.
In Europe, trading was lackluster. The FTSE 100 in London rose in early dealings but traded back down. Broader European markets followed the same path as France's CAC 40 fell 1% during afternoon dealings.
The Nikkei 225 Index of Japan surged overnight 10.23 percent up 3,217 points to its biggest single day gain in points. This had been a rebound after the Nikkei plummeted 12% earlier this week, which sent the global stock markets reeling with sharp declines from the UK, Europe, and the US.
Concerns of a possible US economic slowdown have dominated, while interest rate hikes by Japan the first time in years also impacted global trading dynamics. The Nasdaq, which had sharply soared and plunged in recent days, surged by around 1%, with similar increases by the S&P 500 and the Dow Jones.
In London, the FTSE 100 climbed 0.33 percent before falling back in the open. European markets were also lower in France and Germany, where Paris's CAC 40 slumped 1 percent in afternoon trading.
US markets fell Friday and Monday after disappointing employment data for July showed the unemployment rate rose. Prices of technology heavyweights have come under doubt, particularly those AI hungry companies. The speculation has been fanned by mounting expectations about when and by how much the US Federal Reserve will cut interest rates.
The Federal Reserve voted to keep interest rates intact last week, breaking rank with other central banks that decided to cut rates. Economist Mohamed El Erian slammed the Fed's decision, saying missing a chance to lower interest rates raises the chances of recession. "The Federal Reserve missed an important opportunity to cut interest rates last week like the Bank of England did," El Erian said. He warned that by waiting too long, the Fed might inadvertently push the economy closer to a recession.
Though these views reflect increasing fears of a possible recession, not all authors are willing to predict as such quite yet. "What happens in the US economically and financially does not stay in the US," said El Erian. "The US has been a major driver of global economic growth, and a US recession would have far reaching implications.
That means markets could remain volatile ahead of the Fed's next meeting in September. "Markets are very volatile at the moment and will likely stay volatile until the Fed decision in September, so we wouldn't rule out rapid swings in both directions," said Stefan Angrick, senior economist at Moody's Analytics.
In Japan, volatility in the stock market continued, as the Bank of Japan decided to raise interest rates for only the second time in 17 years. The move sent the yen firmer against the dollar, making Japanese stocks and exports more expensive for foreign investors.
Jesper Koll, Monex Group Japan executive director, continues to be sanguine about Japan's economy. "Japan's fundamentals are solid, recession risks are negligible, and corporate leaders are committed to higher capital returns," Koll said.
Aside from Japan, South Korea and Taiwan also bounced back up by around 3.5%. This is after posting record declines earlier this week.
