The “fear index” Vix soars to highest level in years as Asian, European stock markets slump
The so-called fear index has jumped to its highest level in years this morning as markets in Asia and Europe slumped.
The Vix index leaped to 28.03 points in mid-morning trading, up 46.45 per cent, having opened up 22.55. Its European counterpart the VSTOXX has also shot up, peaking at a high of 35 in early morning trading – the highest level since 2012.
And it follows a similar spike on Friday, when the index leaped 16 per cent to 22.19 on the back of fears over China's slowdown.
The Vix is a shorthand gauge of investor fear, measuring the market's expectation of 30-day volatility on the S&P 500, as implied by the prices of near-term options.
Although this is far from the Vix's record high – when it reached 89.53 in October 2008 – the jump takes the market to its highest since 2011 and is enough to underscore the panic being felt across world markets.
It comes as markets throughout Asia collapsed, prompting some to compare it to the region's crisis in the early 1990s. The Shanghai Composite closed 8.49 per cent down today, wiping out all 2015 gains so far and marking the largest drop since 2007.
Taiwan’s Taiex closed down 4.8 per cent, though during trading it dropped as low as 7.2 per cent – the biggest fall since 1990. Hong Kong’s Hang Seng index and Japan's Nikkei both closed 4.6 per cent down.