Global stock markets have been under severe stress, suffering significant losses over the past week. The most impressive was the fall of the American Nasdaq 100 index, which is one of the key market indicators of technology companies. The index has fallen more than 10% since its peak in mid-July.
Japan's Topix lost double-digits, falling as much as 6% on August 2, its worst day since 2016.
According to the British magazine The Economist, "panic gripped the markets" and Wall Street's "fear indicator" - the VIX index, which measures expected price movements - soared to the highest level since the regional banking crisis in America last year.
Also, "wild" sentiment prevails in certain sectors - the semiconductor index and shares of companies producing chips fell. For example, the price of processor manufacturers Intel and Arm fell by 25 and 40%, respectively.
Assets that investors "flee" to when they are in a panic - gold, the Japanese yen and US Treasuries - are also falling. Gold fell by 2%.
The Economist names three reasons for the collapse.
1. Exaggerated expectations from artificial intelligence. The biggest swings in the prices of American shares occurred in five technological giants that are actively developing AI - Alphabet, Amazon, Apple, Meta and Microsoft.
"The former euphoria of investors about everything related to artificial intelligence is evaporating," the publication writes.
What follows is a "domino effect" for chip and semiconductor manufacturers, which will lose some of their demand if investment in AI falls.
Separately, the instability of this industry is added by Trump's statement that Taiwan - the largest producer of chips - will have to defend itself against China. And also Biden's plans to introduce new restrictions on the export of chip manufacturing equipment to China.
2. Slowing growth of the US economy and weakening of the labor market. In America, a report came out on August 2 that showed unemployment rose to a three-year high of 4.3% in July, while the forecast for job growth fell short.
The risk of recession in the USA has increased.
3) The third factor is the fastest strengthening of the Japanese yen in the last two decades after the decision of the central bank to raise the discount rate. Which automatically lowers Japanese stock prices, as many large Japanese corporations earn overseas in foreign currency. That is, foreign trade will go into the "minus".
This will force many investors to sell off assets, "which will increase volatility in both domestic and global markets."
