The numbers flashing on trading screens on Monday were shocking even to market veterans.
In Tokyo, the Nikkei was down 12%. In Seoul, the Kospi sank 9%. And when the opening bell rang in New York, the Nasdaq plunged 6% in seconds. Cryptocurrencies sank; the VIX, a gauge of stock market volatility, skyrocketed; and investors piled into Treasury bonds, the safest asset of them all.
Whether Monday’s wild gyrations mark the final bang of a global selloff that started to build last week or signal the beginning of a protracted slump is impossible to know. But one thing is clear: the pillars that had underpinned financial-market gains for years — a series of key assumptions that investors across the world were banking on — have been shaken. They look, in hindsight, a bit naive: the U.S. economy is unstoppable; artificial intelligence will quickly revolutionize business everywhere; Japan will never hike interest rates — or not enough to really matter.