Global markets’ fear index VIX closes at highest level since April

Artificial intelligence bubble concerns cause investors to stay cautious despite Nvidia’s performance, experts say

ISTANBUL

The VIX Index, also known as the “fear index,” closed on Thursday at its highest level since April at 26.87 due to the waning expectations of a Fed rate cut and concerns over high valuations affecting tech stocks.

The VIX Index had reached its highest daily close at 52.33 on April 8 this year, after US President Donald Trump unveiled his sweeping reciprocal tariffs.

The Fed’s likelihood of cutting rates at its December meeting fell to 40% in money market estimates, while high valuation concerns over tech stocks pushed up risk perception.

Fed Governor Lisa Cook said a collapse in asset prices may not be a surprise, noting that several risks are affecting the financial system, such as rapidly growing private credit markets, hedge fund trading in treasury securities, and the adoption of generative artificial intelligence (AI) in machine-based trading.

Zafer Ergezen, a futures and commodity markets expert, told Anadolu that the likelihood of a rate cut in the US increased significantly before but fell again in recent days, leading to some selling pressure in the markets, and the sales of risky assets, alongside declines in silver, oil, and bitcoin.

Ergezen noted that the Fed’s rate cut previously brought expectations of an economic recovery, but its falling likelihood dampened these expectations as well.

Seda Yalcinkaya Ozer, manager of research at Türkiye-based Integral Yatirim, told Anadolu that the concerns of an AI bubble are strong despite chipmaker Nvidia’s strong earnings, while the uncertainties over the Fed’s rate cut continue to bottleneck the market.

Ozer noted that the likelihood of a Fed rate cut in December may fluctuate as the meeting approaches, while Trump continues to place relentless pressure on the bank.

“Meanwhile, the Nasdaq is preparing for its largest weekly decline in a long time, closing below its 22-week average of 24,115,” she said. “If the index closes below this level at the end of the week, the market will focus on more key developments, which will be decisive in risk appetite next week.”