Dozens of the world's largest companies lost hundreds of billions of dollars on August 5 due to the fall of global stock markets. The reason for the sharp collapse was growing fears about a possible recession in the US, due to which investors began to get rid of securities and other assets en masse.
Points of attention
- Dozens of the world's largest companies lost hundreds of billions of dollars due to the fall of global stock markets triggered by fears of a possible recession in the US.
- Tech giants such as Nvidia, Apple, and Samsung Electronics suffered significant losses as investors began to sell off securities and assets amidst growing economic concerns.
- Stock markets in Japan, Europe, South Korea, and the United States experienced sharp declines, with key indices recording their worst one-day drops in years.
- The global market turmoil was fueled by concerns about an impending recession and inflated expectations around artificial intelligence, impacting major players in the tech industry.
- Unexpectedly weak US employment data heightened fears of an economic downturn, prompting investors to seek safe-haven assets like gold and speculate on potential interest rate cuts by the Federal Reserve.
"Black Monday" in the stock markets: what is known
The stock market in the USA opened in the red zone. Against this background, the value of Nvidia and Apple decreased by 14% and 8%, respectively. Among the leaders of the decline were also Microsoft and Citigroup.
A decline in the value of Nvidia's shares will lead to a loss of about $358 billion in the company's market value, while a fall in Apple's shares will "wipe out" $277 billion of its market value.
A record fall in Taiwan's stock market, in particular the tech giant TSMC, showed a record fall of 8.4%. Meanwhile, the main index fell 1,807.21 points, its worst one-day decline, to close at 19,830.88, its lowest level since April 23.
South Korea's stock market suffered its worst session since 2008, when the crisis was raging. The KOSPI Balanced Stock Index ended trading down 8.8%, the first time since March 2020. As a result, the protective mechanism worked and the trading stopped for 20 minutes. Top chipmakers Samsung Electronics and SK Hynix lost 10.3% and 9.9%.
The situation on the European market was also not happy. Shares of European technology and semiconductor companies fell. The STOXX Tech Index fell 4.1%, the worst performance among the sector indices.
Shares of chip maker ASM International fell 12%, although the company had already lost 13% on August 2. Shares of the largest company ASML fell by 4%, BE Semiconductor and STMicroelectronic — by about 5%.
August 5 began with a serious blow to the Japanese stock market, which caused a significant decline in all Asian indices. The key Japanese Nikkei index lost 12.4% before the end of trading. This was the biggest drop in 37 years — since October 1987. In the course of trading, the Nikkei fell as much as 4,451 points, which was its biggest drop in history.
Reasons for falling stock markets
The Economist writes that global stock markets fell amid fears of a looming global recession in the US and fears that unrealistically high hopes are being placed on artificial intelligence.
The largest fluctuations were recorded in the technological giants Alphabet, Amazon, Apple, Meta and Microsoft, which are actively developing AI.
On August 2, the US reported unexpectedly weak employment data, which increased fears about an upcoming recession. This situation forced investors to dump shares.
Against this background, gold again jumped sharply in price and approached a record high. This came amid expectations that the Federal Reserve will soon start cutting interest rates.
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