Investor sentiment is "too panicky at the border"
Global stock markets continue their slide at the start of the week. Particularly in Japan, the Nikkei crashes. Investors in the East are in panic. However, an expert sees an opportunity for investors in this crash.
Investors' nerves are on edge at stock markets worldwide. The slide from Friday continues seamlessly at the start of the week. This is particularly noticeable in Japan: The Japanese leading index Nikkei suffered a drop of more than 12 percent. Jochen Stanzl from CMC Markets does not expect a quick recovery. "We went into the weekend very weak and many were expecting stabilization today. However, it doesn't look like that at the moment," he says on ntv. The mood among investors is "bordering on panic" in his estimation.
He does not believe that the first half of the year will continue as smoothly as it started - there are too many stumbling blocks. The global outage of IT and Windows PCs also played a part in this. Furthermore, Stanzl cites profit warnings, quarterly reports that fall short of expectations, and dependence on artificial intelligence (AI) as problem areas. "AI costs a lot of money, which narrows margins and puts pressure on profits," says Stanzl. Additionally, there is fear of a US recession because the US Federal Reserve kept interest rates too high for too long.
While there are initial signs of a recession with a manufacturing PMI index below 50 percent, Stanzl advises waiting for the same index for the services sector before making an assessment. If this also weakens significantly, that would certainly be a reason to become even more nervous. Whether the panic from Japan will spread will be seen by the reaction on Wall Street.
Chris-Oliver Schickentanz, Chief Investment Strategist at Capitell, prefers panic-like selling to a gradual decline. A panic-like sale like in Japan clears the situation, he says. Afterwards, investors can confidently buy again.
"It's more challenging if it goes down by 0.2 percentage points every day. Then a day like this is actually welcome because it opens up new opportunities," says the financial expert on ntv. He considers the largest daily loss in Japan since 1987 to be an overreaction driven by weak US economic data and a sharply rising yen.
For the DAX and German investors, Schickentanz has two important pieces of advice: stay calm and be diversified. "Now is not the time to panic and sell stocks." Furthermore, investors should not focus their portfolio on just a few tech stocks and should pay attention to broad regional and sectoral diversification.
Stock markets have been in a sell-off mode since the end of last week. Among other things, a series of weak economic data around the globe was the background. Investors are worried that high interest rates on both sides of the Atlantic could lead to a recession in the US and other major economies.
In light of the Japan's Nikkei crash, Dax investors might also experience turbulent times. As Jochen Stanzl suggests, the sell-off could present an opportunity for cautious investors to buy stocks at lower prices.
Despite Dax's resilience compared to the Nikkei, Chris-Oliver Schickentanz emphasizes the importance of staying calm and maintaining diversification in German portfolios during such market volatility.
