What are carry trades and how did they contribute to this week's global market mayhem?
The mayhem that swept across world markets this week was partly caused by a market strategy known as the “carry trade.”
By ELAINE KURTENBACH
Published - Aug 06, 2024, 06:55 AM ET
Last Updated - Aug 06, 2024, 06:55 AM EDT
BANGKOK (AP) — The mayhem that swept across world markets this week was partly caused by a market strategy known as the “carry trade.”
Japan’s benchmark Nikkei 225 plunged 12.4% on Monday and markets in Europe and North America suffered outsized losses as traders sold stocks to help cover rising risks from investments made using cheaply financed funds borrowed mostly in Japanese yen.
Markets recovered much of their losses on Tuesday. But the damage lingers.
They were jolted by a combination of factors, including dread of a possible recession in the United States, the world's largest economy, and worries that technology shares have shot way too high this year.
