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The drawn-out time period of U.S. Presidential elections, from the first primaries and caucuses (nominating individual candidates) through to election day, leads to there being an element of surrealism by the time the results finally arrive.

In recent weeks, financial markets have experienced extraordinary levels of volatility, as reflected by the VIX, or Volatility Index. On 5th August 2024, the VIX spiked above 65—a level it has only reached a handful of times this century. To put this into perspective, a VIX reading below 20 typically indicates stable markets, while a reading above 30 signals heightened investor anxiety, often during market corrections, crises, or significant geopolitical events. A VIX measure above 40 is considered extreme, so the recent peak at 65 highlights just how turbulent the market conditions have been.

Monday 5 August saw a global sell off across risk assets, led by losses in Japan and the wider Asia region. The Japanese stock market saw one of the largest impacts, with the Tokyo Stock Price Index (TOPIX) closing the day down 12%, its largest single day fall since the “Black Monday” crash of 1987. This contagion spread to other Asian markets, as well as into Europe and the US, with the S&P 500 Index falling over 2%, and the VIX index (measuring the implied volatility on S&P500 options) rising to its highest value since the covid-crash of 2020.