The Tokyo Stock Exchange recovered on Tuesday, August 6, by gaining 10%. The day before, the Nikkei index had recorded its biggest loss since the financial crash of 1987, falling by nearly 13%. In the wake of this, financial markets experienced a lull all over the world. Is all this rational?
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Tokyo is showing us the great joys of stock market speculation. One day the market is very high, investors take back their profits, which causes the stock market to fall. The next day, these same investors reinvest their money by buying cheaper shares and the market goes back up. A nice financial somersault. This is why we must keep a cool head and not overbid. Moreover, after the Tokyo rout on Monday morning, August 5, the European markets did not overreact, like the Paris Stock Exchange which ended the day with a decline limited to 1.4%.
Speculation does not detract from the fundamental indicators. Nervousness has been particularly palpable since Friday with the announcement of the number of job creations in July in the United States. The American economy created 114,000 jobs, around 30% less than expected. The unemployment rate increased to 4.3%, the highest since 2021. The difference is such that it raises questions about the proper management of the American economy, a key factor less than six months before the presidential election in the United States.
Stock market operators are also concerned about the development of the situation in the Middle East, the collapse of technology stocks (Microsoft, Amazon, etc.) which are scaring investors by swallowing up very heavy investments in Artificial Intelligence for results deemed unconvincing. Finally, there is also the fear that the American Central Bank has been slow to lower its interest rates to support a weak economy.
The real question is whether the European economy will follow the same path as that of the United States. We can see that Germany, the economic engine of the Eurozone, is experiencing serious difficulties. Currencies must be watched very closely. Uncertainties about the American economy are causing the dollar to lose its safe haven status and investors are turning to other currencies, including the euro. However, a rising euro makes our exports more expensive and penalizes our economy. A collateral effect that is certainly more serious than the whims of the Tokyo Stock Exchange.
