seemingly unstoppable bull run, after months of hitting new all-time highs. Now they are in free fall. America’s Nasdaq 100 index, dominated by the tech giants that were at the heart of the boom, has fallen by more than 10% since a peak in mid-July.
Japan’s benchmark Topix index has clocked losses well into the double digits, dropping by 6% on August 2nd alone—its worst day since 2016 and, following a 3% decline on August 1st, its worst two-day streak since 2011. Share prices elsewhere have not been bludgeoned quite so badly, but panic is sweeping through markets (see chart 1). Wall Street’s “fear gauge", the VIX index, which measures expected volatility through the prices traders pay to protect themselves from it, has rocketed to its highest since America’s regional-banking crisis last year (see chart 2).
Look beneath the surface, at individual sectors and firms, and the mood is even wilder. The Philadelphia semiconductor index, which tracks companies in the chipmaking supply chain globally, has fallen by more than a fifth in a matter of weeks. Arm, one such firm, has lost 40% of its market value.
The share price of Nvidia, the previous bull run’s darling, has been flailing. In the three days from July 30th it dropped by 7%, soared by 13%, then dropped by 7% again. On August 2nd the value of Intel, another chipmaker, plunged by more than a quarter.
And it is not just the semiconductor industry. The KBW index of American banking stocks has fallen by 8% in a matter of days. The prices of Japanese bank shares have plummeted, too.
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