Sharp Decline in European Indices Marks Start of the Week
The European markets commenced the week with a significant downturn, although they managed to mitigate some of the losses by the end of the trading session, amidst global stock sell-offs, as reported by financial news outlets.
The pan-European index Stoxx 600 closed the day down by 2.2%, having previously experienced a drop of over 3%. The technology sector ended the session with a decrease of 1%.
All sectors and major exchanges were in the red, with utilities and oil and gas companies facing declines greater than 3%.
Reasons Behind the Decline
Analysts pointed to several factors contributing to the downturn in Europe, Asia, and the U.S., which began last week. These include fears of a recession in the U.S., rapid interest rate cuts by the Federal Reserve, the recent hawkish stance of the Bank of Japan, and an ongoing reevaluation of the technology sector.
The VIX index, which measures expected market volatility, surged by over 100% to 64.06 points during Monday’s trading, before cooling off to around 35 points, still marking its highest level since 2020.
U.S. Market Reaction
U.S. stocks experienced sharp declines at the beginning of the trading session. The Dow Jones Industrial Average lost nearly 1,000 points, or 2.5%, while the technology-heavy Nasdaq Composite fell by 2.6%.
Asian Markets Lead Sell-Off
The Asia-Pacific region led the sell-off on Monday, with Japanese equities entering bear market territory. The Nikkei 225 experienced a staggering 13.4% drop, marking its worst day since 1987. The broader Topix index also suffered, falling by 12.23%.
Meanwhile, the Japanese yen surged to its highest level against the dollar since January, while U.S. Treasury securities appreciated in value.
Service Sector Performance in the UK
In the UK, service demand saw an uptick in July, rising to 52.5 points from 52.1 points the previous month. Comparable data from Italy and Spain also indicated steady growth in the sector, albeit at a slower pace than in preceding months.
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