[News & Analysis] Liquidity party end? ... US stock market crash, world over

[News & Analysis] Liquidity party end? ... US stock market crash, world over

US inflation fears spread worldwide

Dow two days new 1841P crashed ... Asia stocks plunge every day

The US 'rising wage inflation' signal has worsened global asset prices such as stocks, bonds, gold, and dollars.

Concerns that the US, which has started monetary tightening since December 2015, could speed up the rate hike in response to the inflationary upswing.

The Dow Jones Industrial Average (Dow Jones Industrial Average) fell 2.5 percent on Thursday after a US Treasury interest rate hike (bond price drop).

On the 5th, the Dow plunged 1175.21 points (4.6%) from the previous trading day, putting the stock market into horror.

That's 1841 points in just two trading days.

The Dow Jones Industrial Average (Dow Jones) declined to a record high in August,

The Dow Jones Industrial Average (Dow Jones Industrial Average) was down 2 percent from 11:30 pm local time immediately after its opening on June 6.

Given the solid performance of the US, the 9-year-end bull market is likely to be concluded at an early date, but market sentiment has risen sharply.

In particular, if the European and Japanese central banks turn to the monetary tightening mode after the US, bubbles of stocks, bonds, and real estate will be lifted and real asset price readjustment will occur.

Tyler Cowen, a professor at George Mason University, said in a Bloomberg article, "Global liquidity flowed into high-value assets such as the New York stock market and advanced country real estate, and asset prices continued to rise for a long time, "He said.

Federal Reserve Chairman Janet Yellen, who retired last week, expressed concern that US stock and business real estate prices are quite high. Despite a surge in US Treasury bond prices as a result of the global stock market plunge, bond prices fell to a level of 44bp (1bp = 0.01 percentage point) or interest rate during the first month of this year.

With the large-scale purchase of bonds by central banks in advanced economies such as Europe and Japan, government bond prices were unusually high, but it appears that they are entering a bear market in an instant.

The US dollar also showed strong gains on the safe-haven investment sentiment. Oil prices plunged 2% (West Texas crude) against the US dollar.

As global asset prices fluctuated and the market sentiment shrank, the Volatility Index (VIX), the so-called Fear Index, surged to 37 in the afternoon at 3 pm.

Wall Street Journal (WSJ) said the volatility index soared above 20, the first time since November 2016, when Donald Trump was elected president.

The major European stock markets also started to decline at the same time as they opened on June 6, showing a decline of 2% as of 1:30 pm (UK time).

On the 6th, the Korean stock market is estimated to have saved more than 4 ~ 5% of major Asian stock markets such as Japan, Hong Kong and Taiwan.

The KOSPI and KOSDAQ indexes fell 1.54% and 0.01%, respectively.

If the stock market continues to plummet in the US, the entire global stock market may fall into a black hole, but unlike in the US, the prospect that asset prices will not suddenly adjust in Korea is still prevailing.

The reason for this outlook is that Korea was relatively alienated from the global bull market during the last decade.