The volatility index, often called Wall Street’s “fear gauge,” has hit an 8-month high. This shows investors are worried about the economy. Experts say the spike in the fear gauge is due to inflation, possible interest rate hikes, and global tensions.
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The fear gauge measures how much the stock market is expected to swing based on S&P 500 options. Analysts think the higher volatility means investors are trying to protect against potential losses.
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Economist Katie Martin said the rise in the VIX shows the market could be easily shaken by surprises and new economic data.
Economist John Plender stressed that investors need to stay informed and navigate the markets wisely during this rough period.
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He said to use expert analysis and market insights to better grasp global economic trends and how they may impact investments. Financial advisors are telling investors to be careful right now.
They suggest diversifying portfolios to lower risks. As the economy keeps changing, investors who want to make smart choices will need to stay up to date using reliable financial news and expert opinions. Hong Kong’s Hang Seng Index saw its biggest drop since 1997 on April 7.
It fell 13% due to worries about a trade war that could cause a recession. China’s CSI300 index also fell 7%. China’s state funds stepped in to try to stop the drop.
UBS economists warned of the big economic impacts this market turmoil could have. They said to be careful as the region goes through this tough time. Asia-Pacific markets continued to fall Monday as fears of a global trade war grew.
U.S. President Donald Trump’s tariffs made investors want to avoid risk in the region. The Hang Seng Index fell 13.22% to 19,828.30. The Hang Seng Tech Index dropped 17.16% to 4,401.51.
China’s Shanghai Composite had its biggest one-day drop since last October, falling 7.05% to 3,589.44. Qi Wang, a chief investment officer, said Chinese markets are hurting from Beijing’s response to Trump’s tariffs. Wang is watching to see how the European Union responds.
Markets react to trade fears
The EU said it may strike back. Japan’s Nikkei 225 fell 7.83% to 31,136.58.
The Topix index dropped 7.79% to 2,288.66. Earlier, trading in Japanese futures stopped because the market hit circuit breakers. South Korea’s KOSPI index fell 5.57% to 2,328.20.
The Kosdaq declined 5.25% to 651.30. Australia’s S&P/ASX 200 fell 4.23% to 7,343.30. Trump’s tariffs so far are expected to raise U.S. prices by about 2% and hurt growth by around 0.9%.
Asset manager Schroders thinks China and Vietnam will lose over 0.5% of GDP. The EU and Japan may lose 0.3% to 0.4% of GDP. U.S. stocks also fell last Friday after China put tariffs on U.S. goods, raising fears of a global trade war.
The Dow dropped 5.5%, the S&P 500 fell 5.97%, and the Nasdaq fell 5.8%. UOB Kay Hian does not expect China to weaken its currency on purpose to “defend itself” against U.S. tariffs right now. Qi Wang, the firm’s chief investment officer, thinks China wants to separate from the U.S. somewhat.
He expects China to focus on fiscal and monetary policies and boosting domestic demand. The Chinese yuan and other Asia-Pacific currencies weakened against the dollar. But the Japanese yen gained against the dollar.
Singapore’s Straits Times Index was down 7.73%. Singapore’s major banks – DBS, OCBC, and UOB – were among the worst performers. But Daphne Tan at CMC Markets Singapore said the drop in Singapore’s bank stocks could be a “buying opportunity” as their values become more attractive.
Asian tech stocks posted big losses on Monday. Japan’s SoftBank Group fell 14.10%. South Korea’s SK Hynix dropped 8.51% and Samsung Electronics fell 4.46%.
In Hong Kong, Tencent plunged 20.24%, Alibaba slid 16.94%, and Meituan dropped 16.19%.
