Expert explains why stock markets around the world are crashing 17:14

Global markets fell due to rising unemployment in the US and worsening profit forecasts for leading American companies. This view was expressed by Nikolai Ryaskov, Chief Investment Officer of the Management Company PSB, in an interview with socialbites.ca.

“The probability of a recession in the US has increased significantly, and the decline in global indices reflects this negativity. Now we see a revaluation of risks in the markets – risk aversion,” said Nikolay Ryaskov, general director of investments at PSB Management Company.

According to him, for Russians and Russian blue chips, the risk of a recession in the United States could be a negative factor due to a possible decline in demand for commodities.

Ryaskov stressed that all markets are interconnected. The United States is Japan’s key trading partner in both import and export chains. The slowdown in US industrial demand is affecting trading partners. This is indicated by the manufacturing business activity index (M-PMI) and the weak activity of industrial distributors.

The Japanese economy also plays the role of a liquidity provider. The first quarters of 2023 and 2024 were difficult for the Japanese yen against the US dollar. One of the reasons for the currency’s weakness was current trade; yen-denominated loans were cheaper than in the US in terms of the country’s monetary policy.

“International market participants received liquidity in yen, converted the currency into dollars and profited from the exchange rate difference and the depreciation of the yen against the dollar. Now there is a sharp decrease in the debt burden of these operations,” Ryaskov explained.

Japan’s Nikkei 225 stock index fell 13.47% to a seven-month low on Monday, a record drop that experts say has not been seen since Black Monday in 1987 and the financial crisis in 2011.

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