1. **Seasonal Patterns (September Effect)**: Historically, September has been a weak month for stock markets, with many investors returning from summer vacations and rebalancing their portfolios, which often leads to increased selling pressure. Additionally, mutual funds tend to close out losing positions toward the end of their fiscal year, further contributing to volatility. This phenomenon, known as the "September Effect," has been consistent for nearly a century, with average negative returns during this month [[❞]](https://www.investopedia.com/stocks-september-effect-economy-presidential-election-inflation-fed-2024-8705709).
2. **Yen Carry Trade Unwind**: Another major factor comes from Japan, where the central bank's unexpected interest rate hikes have triggered the unwinding of the "yen carry trade." In this strategy, investors borrow cheap yen to invest in higher-yielding assets, including U.S. stocks. As Japan raises rates, the cost of this trade increases, causing investors to sell off these assets, including tech stocks in the U.S. This has exacerbated market turbulence, and experts warn that further rate hikes in Japan could continue to impact global markets [[❞]](https://markets.businessinsider.com/news/stocks/stock-market-prediction-yen-carry-trade-bank-of-japan-rates-2024-9).
3. **Rising Interest Rates**: In addition to the Japanese central bank, central banks globally, including the Federal Reserve in the U.S., continue to signal higher interest rates to combat inflation. This has pressured stock valuations, especially in interest-rate-sensitive sectors like technology [[❞]](https://markets.businessinsider.com/news/stocks/stock-market-prediction-yen-carry-trade-bank-of-japan-rates-2024-9).
In summary, the combination of historical patterns, changes in Japanese monetary policy, and global interest rate hikes are driving the recent collapse in stock markets. While these factors are contributing to uncertainty, markets could stabilize as central bank policies become clearer.
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