Was 'Black Monday' Really a Black Day for Global Markets?

What exactly happened?

This week was anticipated to be one of the most volatile for global stock and forex trading, yet it concluded almost where it began.

The turbulence kicked off in Japan early on August 5th, when the Nikkei 225, Japan's major stock index, plunged over 20% from its record high on July 11th, 2024. This sharp decline marked the index's entry into bear market territory, wiping out all yearly gains. It was the worst trading day Japan had experienced since the infamous "Black Monday" crash of 1987.

By 11 a.m. ET, major U.S. indices had also taken a hit, though less severe than Japan's drop. Dow Jones futures dipped 1.89%, S&P 500 futures declined 2.71%, and Nasdaq 100 futures tumbled 4.12%. Oil prices mirrored the market's movement, falling to eight-month lows, driven by concerns about a potential slowdown in the U.S. economy after disappointing economic data from the previous week.

Even Bitcoin wasn't spared from the sell-off, dropping to its lowest level in over six months—an unusual pattern for the world's largest cryptocurrency, which often shows resilience during times of market fear, similar to safe-haven assets. The closest example is COVID-19 times.

However, the market found its bottom the same day, and by the end of the week, global stock markets are poised for a positive close. Thursday brought relief to traders as better-than-expected weekly jobless claims data (233K vs. 241K last week) helped restore some calm on Wall Street.

Major Wall Street indices ended Thursday on a high note, with the Dow Jones Industrial Average rallying nearly 1.8%, the tech-heavy Nasdaq Composite surging 2.9%, and the S&P 500 jumping 2.3%—its best performance since November 2022.

Despite these gains, the major indices are still down for the week, with the S&P 500 off by 0.5%, and both the Nasdaq and Dow down approximately 0.7%. The S&P 500 and Nasdaq are now on track for their fourth consecutive losing week, reflecting ongoing market uncertainty.

Crude oil prices dipped slightly on Friday but remained on course for strong weekly gains, buoyed by improving sentiment around the U.S. economy and ongoing geopolitical tensions. China's better-than-expected inflation data, a critical factor given its status as the world's largest oil consumer, also supported oil prices.

As we head into the weekend, let's hope this Friday brings more optimism to the trading world than last. Stay tuned, and be sure to check out our "Top Trends for Traders" on Monday to stay ahead of the markets.

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