1. Signs of a slowing U.S. economy sowed panic among investors on Monday, with a sell-off in markets that began last week turning into a global rout. The declines followed a U.S. jobs report on Friday that showed significantly slower hiring, with unemployment rising to its highest level in nearly three years. This deepened fears that the world’s largest economy could be sliding into a recession and that the Federal Reserve may have waited too long on cutting interest rates. Some investors saw the sell-off as a sign that the economy was at risk of recession, while others said the move was more the result of a pullback from overextended bets on tech stocks and artificial intelligence. That, in turn, was set against a backdrop of the usual summer lull in trading volumes, which can lead to abrupt and severe swings in prices. As stocks tumbled across Asia, Europe and the Americas, few sectors were spared as investors cashed out and sought refuge from a broad-based slump. The moves were a sharp reversal in major stock markets, which for much of the past year have risen to new heights, propelled by optimism about cooling inflation, solid labor markets and the promise of artificial intelligence technology. (Source: nytimes.com)
2. James Mackintosh:
The selloff—which at one point had chip maker Nvidia down 15%—was so big because investors had been all-in betting that things would work out well. Now things have calmed a bit, the question is whether the unwind of these bets, and the leverage behind them, is done. If it resumes, will the selloff feed back into higher savings and a weaker economy or, worse, hit the financial system?
The extreme examples of past effects from big market falls are 1987’s crash, 1998’s Long-Term Capital Management blowup and 2008’s global financial crisis. History is never perfect, but so far this looks more like a (much milder) version of 1987 than it does the other two. (Source: wsj.com)
3. Japanese stocks surged earlier today, leading markets higher across Asia in a striking reversal of the previous day’s global sell-off, as European stocks also recouped some of their losses. Amid warnings from traders to expect extraordinary volatility, Japan’s broad Topix index closed 9.3 per cent higher and the yen stabilized at about ¥145.70 to the dollar after strengthening sharply in recent weeks. The tech-heavy Nikkei 225 rose 10.2 per cent. European stocks also clawed back some of their losses in early trading, although steered clear of a dramatic rebound. (Source: ft.com)
4. Mainland China added more than 237,000 new companies involved in artificial intelligence (AI) during the first half of this year, according to corporate database platform Qichacha, taking the total to 1.67 million amid Beijing’s efforts to foster the technology’s development. Of that total, more than 1.48 million – almost 90 per cent – were set up after 2017, when the State Council, the country’s cabinet, published the Next Generation Artificial Intelligence Development Plan that outlined a goal to become a world leader in the technology. The annual number of new AI-related company registrations hit a record of more than 467,000 last year, which came on the heels of Microsoft-backed OpenAI’s release of ChatGPT on November 30, 2022 – when the public gained access to a chatbot that can quickly draft emails, craft speeches or summarise documents based on simple prompts from users. (Source: scmp.com)
Keep reading with a 7-day free trial
Subscribe to News Items to keep reading this post and get 7 days of free access to the full post archives.