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Panic continues to spread in global financial markets. This afternoon, Asia-Pacific stock markets plummeted, Japanese stocks continued to plummet, and the Korean stock market plummeted, triggering the circuit breaker mechanism.

Affected by the plunge in Asia-Pacific stock markets, U.S. stocks fell sharply before the market opened. Tesla fell more than 6%, Intel fell nearly 4%, Micron Technology fell 7.3%, Qualcomm fell 3.15%, AMD fell 3%, Microsoft fell 4.2%, TSMC fell 8%, and Nvidia fell 8.2%.

Japan and South Korea both have circuit breakers

On August 5, the Nikkei 225 Index fell by more than 12% and fell below 32,000 points, erasing all gains so far this year. It was the largest point drop in history in a single day, surpassing the record of "Black Monday" in October 1987.

In response to the stock market crash, Japanese Finance Minister Shunichi Suzuki said that stock prices are determined by the market and it is important for the government to make decisions calmly.

The South Korean stock market also plummeted. The South Korean KOSPI index fell 8%, triggering the circuit breaker mechanism and trading was suspended for 20 minutes; the South Korean ChiNext index plummeted 8% and triggered the circuit breaker mechanism.

European stock index futures fell sharply, with Germany's DAX index futures down 1.03%, France's CAC40 index futures down 1.7%, Europe's STOXX 50 index futures down 1%, and Britain's FTSE 100 index futures down 0.5%.

Affected by the plunge in peripheral stock markets, cross-border ETFs continued to decline. Japan's Topix Index ETF (513800), Nikkei 225 ETF (513880), and Nasdaq Technology ETF (159509) hit the limit down in the afternoon. Nasdaq ETF (513300), Nikkei 225 ETF E Fund (513000), Nasdaq ETF (513100), and Nikkei ETF (159866) fell by more than 7%.

From the news perspective, there are three main reasons for the spread of global panic:‍‍‍‍‍‍

First, weak U.S. employment data triggered market concerns about a U.S. economic recession.

The July employment statistics released by the U.S. Department of Labor last Friday (August 2) showed that non-agricultural sector employment was lower than market expectations and the unemployment rate also rose.

Affected by the US employment statistics, investors' vigilance against the slowdown of the US economy intensified, and US stocks plummeted on the same day. In the Asia-Pacific market, investors' risk aversion attitude intensified.

Second, the news that Buffett sold a large number of stocks and Apple's holdings were halved dominated the screen over the weekend, intensifying the market's discussion on the signal that the US stock market has peaked.

Third, Japan's sudden interest rate hike led to a major reversal of global capital carry trade.

Previously, the interest rate of Japanese yen was low, and global capital borrowed low-interest Japanese yen and exchanged it for other currencies such as US dollars to invest in assets in countries with high interest rates. The Bank of Japan suddenly raised interest rates and reduced its balance sheet, interrupting all carry trades of global capital. The sharp rise in the Japanese yen exchange rate led to global capital deleveraging, selling stocks one after another to repay the yen. This operation triggered a major crash in the Japanese stock market, and the panic of selling spread to the world.

Bitcoin plummets

On August 5, the price of Bitcoin once fell below the $50,000 mark. As of press time, Bitcoin has rebounded to about $52,740.2 per coin, having previously dropped to the $50,000 mark. Digital currencies such as ETH, SOL, and DOGE have all fallen by more than 10%.

According to Coinglass data, nearly 280,000 people had their positions liquidated in the past 24 hours, with a total liquidation amount of approximately US$1.06 billion.

According to CoinMarketCap data, the total market value of cryptocurrencies evaporated by about US$300 billion in one day, falling to about US$1.85 trillion, a 24-hour drop of more than 16%.

Market analysts believe that the sharp appreciation of the yen has impacted the stock market and cryptocurrencies to some extent. Hayden Hughes, head of crypto investments at family office Evergreen Growth, said that digital assets are part of the victims of yen carry trades as speculators adapt to higher interest rates in Japan.

It’s worth noting that there’s also an overhang in the market regarding the possible near-term sale of Bitcoin seized by the U.S. government and the risk of an oversupply of tokens being returned to creditors through bankruptcy proceedings.

Recently, Arkham Intelligence, a well-known blockchain research company, said that during the cryptocurrency trading last Monday, a wallet associated with the US government transferred $2 billion worth of Bitcoin assets to a new address.

Generally speaking, there are two main reasons for the large-scale transfer of Bitcoin to new addresses: ledger security considerations and Bitcoin sales plans. Obviously, the cryptocurrency circle is worried that the US government may be planning a large-scale sell-off, which will lead to a panic sell-off of Bitcoin in the crypto market.

A shares weakened in the afternoon

On August 5, affected by the sharp drop in external stock markets, the three major indexes closed down collectively.

As of the close, the Shanghai Composite Index fell 1.54%, the Shenzhen Component Index fell 1.85%, and the ChiNext Index fell 1.89%. The turnover of the Shanghai and Shenzhen stock markets was close to 800 billion yuan, and the number of stocks that fell exceeded 4,700.

Most industry sectors closed in the red, with education, gaming, aviation and airports, and tourism and hotel sectors leading the gains, and consumer electronics, semiconductors, electronic chemicals, electronic components, communications equipment, computer equipment, and automobile sectors leading the declines.

However, judging from the market, some sectors are still strengthening against the trend.

Liquor stocks led the gains, driving the food and beverage sector to rise to the top. Royal Group and Rock Stocks hit their daily limit, while Shanxi Fenjiu, Luzhou Laojiao, Qianwei Yangchu and others rose by more than 2%.

The tourism and education sectors rose, with the social services sector leading the gains, with Xiangyuan Culture Tourism, Kevin Education, Anbang Security, and Action Education hitting their daily limit.

Brokerage stocks strengthened, non-bank financial stocks rose against the market trend, Xiangcai shares hit the daily limit, Jinlong shares rose more than 8%, Guosheng Financial Holdings, China Life Insurance and others rose more than 1%.

TMT fell, and the electronics, communications and computer sectors fell together. Yingjianke, Qiming Information, Shenglan Holdings, Shenghong Technology and other stocks fell the most.

Editor: Chen Lixiang

Proofreader: Yang Lilin