European stock markets rebounded on Tuesday after a "black Monday" in Japan
In the UK and France, the downward trend of the previous day did not initially continue. In London, the FTSE 100 index rose by 0.5 percent at the start of trading in the morning to 8050.58 points. In the Eurozone, the Parisian CAC 40 index increased by 0.2 percent to 7159.94 points. However, by midday, prices also gave way here, which aligns with analysts' assessments that markets may face a period of volatility in the near future.
"Market jitters around the world are likely to remain high for some time, along with fluctuations in indices in the coming days and perhaps even weeks," commented capital market strategist Jürgen Molnar of Robomarkets. Even with Tuesday's recovery, he added, it's too early to speak of a market bottom, as "the coming days and, not least, developments in the Middle East must be watched. An Iranian attack on Israel could bring back the panic of yesterday."
CMC Markets' chief market analyst, Jochen Stanzl, noted that investors on the New York Stock Exchange, where the Dow Jones had fallen by 2.6 percent on Monday, had remained calm - "despite global market turmoil and the fact that sentiment has now reached an extremely anxious level." This could allow the market to find a bottom in the next one to two weeks. "Prices fell so sharply yesterday because investors temporarily lost their nerve."
He also pointed out that there are no clear signs of an economic downturn in the US. "Even though the specter of recession has returned, it's currently only happening in investors' minds. There's no concrete evidence."
On Monday, the Nikkei in Tokyo plummeted amid weak US jobs data and concerns about an economic slowdown in the world's largest economy, losing more than 12 percent - the largest point drop in the index's history.
Prior to this, on Friday in Washington, the latest jobs report was released, showing that only 114,000 new jobs were created in the US last month - far fewer than in June and well below expectations. The US unemployment rate also rose to its highest level since October 2021.
This has increasingly raised the question of whether the US Federal Reserve (Fed) may have kept interest rates and, consequently, borrowing costs for the economy too high for too long.
Despite the notable decrease in various indices worldwide, some analysts believe that the "black swan" event of an Iranian attack on Israel could further exacerbate market volatility. In contrast, Jochen Stanzl suggests that the US market may not be facing an imminent economic downturn, as the specter of recession is currently more a product of investor anxiety rather than concrete evidence.
