Wedbush‘s Dan Ives warns of a brutal day for U.S. markets and tech stocks, following a historic sell-off in Nikkei and the unwinding of the Yen carry trade.
What Happened: On Monday, Ives took to X to express his concerns about the potential impact on U.S. markets and tech stocks due to the historic sell-off in Nikkei and the unwinding of the Yen carry trade.
“Nikkei historical sell-off as Yen carry trade unwinds in brutal fashion and global economic/geopolitical jitters will cause a nasty day for US markets and tech stocks. We keep same tech playbook we used during March 2020 Covid sell-offs and other macro panic events last few years,” he wrote.
The analyst’s post comes in the wake of a “bloodbath” in Asian and European markets, with Japan’s index crashing by 13%. This was triggered by the unwinding of Yen carry trades, a strategy where investors borrow yen at very low interest rates and invest in another currency in a country with a higher rate of return.
Why It Matters: The sell-off in Nikkei and the unwinding of Yen carry trades have sent global markets into a tailspin. The U.S. stock markets closed lower on Friday, with the Nasdaq Composite entering correction territory. A disappointing jobs report has fueled recession fears, with investors signaling a shift in sentiment where bad economic news is viewed as a genuine concern rather than a potential trigger for Federal Reserve easing.
As the first markets to open, the Australasian markets plunged hard, raising concerns about the potential for a longer-term impact on the market. The unwinding of the Yen carry trade comes after the Bank of Japan maintained a negative interest rate for about eight years until March, and at a very nominal 0-0.1% until late-July, marking the first hike in 17 years.
Read Next:
Image via Midjourney
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
