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Global crisis: Effects on financial markets and Bitcoin, risk of recession in the USA and impact on the world economy!
Stock markets around the world started the week in free fall, with markets in Asia leading the negative movement. The expectation of an increase in interest rates in the Japan and signs of a possible recession in the USA are causing global turmoil. O bitcoin, in turn, was not immune and also suffered a significant devaluation. Let's understand the reasons behind this scenario and its implications, according to Magazineforum.
Stock performance in Asia
Circuit Breaker on the Tokyo Stock Exchange
This Monday morning, Asian stock markets faced a real storm. O Nikkei 225 index and Topix, main indicators of Tokyo Stock Exchange, recorded drops of more than 7%, accumulating losses of around 20%. This extreme situation triggered the circuit breakers, a mechanism that interrupts trading to avoid even more sudden fluctuations, something that has not happened since the dark times of the coronavirus pandemic.
In addition to Tokyo, other Asian exchanges such as Seoul and Istanbul also suffered significant declines. New York Stock Exchange futures plummeted, reflecting the pessimism spreading across global markets. In the world of cryptocurrencies, bitcoin fell more than 10% on Sunday night, intensifying the feeling of crisis.
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Threat of recession in the USA
Worrying economic indicators
The US economy is showing warning signs. Analysts at JPMorgan points to a 50% risk of recession due to recent negative economic indicators. The unemployment rate, for example, rose to 4,3%, causing concerns about a possible economic slowdown. This weak data fuels fears of a recession, leading investors to adopt a more cautious stance and withdraw their investments from riskier assets such as stocks.
The effects of this pessimism are not limited to the US. Global economic uncertainty has led to a reassessment of investment positions, resulting in sharp declines in stock markets around the world.
Rising interest rates in Japan
Impacts on exports and Carry Trade
Another factor that is putting pressure on markets is the expectation of an interest rate increase by the Bank of Japan. After a long period of ultra-accommodative monetary policy, the possibility of an increase in Japanese interest rates is having a significant impact. An increase in the interest rate may result in appreciation of the yen, which would negatively affect Japanese exports and, consequently, the profits of exporting companies.
The strategy of Carry Trade, which involves borrowing yen at low rates to invest in higher-yielding assets in other countries, has also become less attractive with the prospect of higher interest rates in Japan. This adjustment in monetary policies is creating a uncertainty scenario, contributing to volatility in financial markets.
Strategies
Protect assets in times of crisis
With the global market falling and volatility on the rise, it is essential that investors adopt investment strategies asset protection. Staying informed about economic and political changes, diversifying investments and seeking refuge in safer assets are important steps to navigating times of crisis. The global economy is facing significant challenges, and being prepared for these fluctuations can make all the difference.
