We Said Don’t Panic; It Seems Markets Didn’t Listen

A broad swath of assets have sold off on Monday, many have recovered

On Friday, we said the unemployment data wasn’t worth panicking about… yet. It seems markets didn’t listen.

A weekend selloff across many “unrelated” assets: Japan and Korea led selloffs internationally, but US large caps sold off too

Overnight on Sunday, Japan’s main index saw its biggest daily drop since 1987 (left). South Korea’s main index sold off nearly as much, falling almost 11% — its biggest drop in 20+ years (right).

Coming back into work ourselves on Monday, the Nasdaq-100 “only” fell about 3%. But some of the AI stocks fell more, with Nvidia falling over 6%, and Apple, Google, and Amazon all falling over 4%.

Of course, this selloff pushed up the VIX equity market volatility metric, rising from 20 on Friday to as high as 65 on Monday:

Currencies moved every which way

The Japanese yen strengthened with the BOJ hiking rates, while Fed rate cut expectations rose, making the dollar relatively less attractive (left). The Swiss franc strengthened as a safe-haven asset (right).

Looking longer term, stocks now in correction

Since its high on July 10, the Nasdaq-100 is now in correction territory, pulled down by the Mag 7 (right) nearing bear market (20%+ off its high) territory on a combination of concerns about AI profitability and renewed recession fears.

Small caps weren’t immune either, with the Russell 2000 also falling into correction, having fallen 10% in three days.

What happens next?

No one knows! But a lot of Monday’s losses have been recovered already (chart below).

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