Understand recent market turmoil and get insights on what's ahead.
Dear Anshari Kurniawan,
Unexpected events have recently shaken the financial markets, leading to global asset sell-offs and market volatility.
Keep reading for a breakdown of these events and gain insights from our Senior Financial Markets Strategist, Quoc Dat Tong.
BoJ interest rate hike
Last Wednesday the Bank of Japan (BoJ) raised interest rates from near zero to 0.25% to stabilize the yen.
This triggered the unwinding of yen carry trades, where investors borrow low-interest-rate yen to invest in higher-yielding assets.
The sudden yen appreciation resulted in substantial losses for investors, who now need to repay their yen loans, forcing asset sell-offs.
Rising unemployment rates
US unemployment rate increased to 4.3% last Friday, higher than the expected 4.1%.
This is the highest rate since November 2021, indicating potential cracks in the labor market.
The increase triggered the Sahm Rule, a recession indicator that signals economic downturns when the rate rises by 0.5 percentage points over its 12-month low.
ETH sell-off
A wallet associated with Jump Trading, a trading firm and major player in crypto, sold $91 million worth of ETH on Binance.
This sell-off occurred during a period of lower market liquidity, raising further concerns within the crypto community.
Market impact and outlook
While these events have contributed to a broader market panic, and investors are bracing for further downturns and volatility, it's important to remember the following:
Panic sell-offs are often short-term. Markets have historically rebounded as soon as they find new sources of funding.
Look out for opportunities after the initial shock. Large amounts of money is currently parked in banks as cash or treasury bills, waiting for opportunities to invest in high-quality assets affected by the global panic.
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