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The situation of the US stock market suggests an impending global crisis
For the first time in the history of the US stock market, stock indexes fell by more than 1% on Christmas Eve. The Nasdaq Composite Index, which includes the shares of many high-tech companies, recorded a record drop of 4.43% over 2011. Update of the anti-record and S & S index P to the basket of the 500 most elected US companies with the highest capitalization. In December, it dropped by 16%. According to experts, this could mean the approach of the global economic crisis.
By the way, the worst performance indicators of the month on the stock market have only been three times in its history:
- in October 2008 (-18.4%, in the midst of the economic crisis and after the collapse of Lehman Brothers in September);
- in October 1987 (-24.5%, the first computer crash);
- in 1929-33 (November -29 -30.8%, December -31 -20.8%, April -32-27.4%).
It is also exceptional that the stock markets did not collapse before Christmas, even before, but on the contrary, the month of December was one of the most successful of the year.
In the tech sector, which was restored in October after falling earlier this year in December, it has again lost investor confidence. Netflix shares fell 9.4%, while Amazon, Alphabet, Facebook and Microcoft lost more than 5% of their capitalization.
The sale also touched the shares of industrial companies and banks: General Electric, Goldman Sachs, Bank of America, Deere lost more than 3% of the cost.
What may be the cause of the fever on the market
Many experts have already agreed that the world is on the brink of another economic crisis, and this threshold will eventually be forced to pass. This is the opinion of the managing partner of Capital Times investment firm Eric Naiman. He thinks that the crisis is actually much closer than it seemed and gives additional facts about his approach, with the exception of the fall of December.
Returning to the S & P index, it has collapsed by 20% since September. Naiman points out that such a decline has been observed only 7 times:
- in October 2008 (in the midst of the economic crisis);
- in October-December 1987 (flash crash without economic crisis, this was the trough of the market);
- in August-September 1974 (at the height of the economic crisis);
- in June 1962 (the collapse of the crisis-free market and it was the bottom of the market);
- in June 1940 (the collapse of the market without crisis and it was low of the market)
- in October-November 1937 (at the height of the economic crisis);
- in 1929-33.
"Currently, the US economy is not yet in crisis An economic crisis can be triggered by the stock market of similar crises – for many Americans, equities are an important asset, many receive a portion of salary, including equities (eg Amazon employees), that is to say that one can expect a sharp decline in the activity of the US consumers leading to a crisis. "- Noted on Eric Nayman's Facebook page.
Domino Effect
US concerns have influenced other global stock markets and caused global panic. Thus, the painful reaction to the Asia-Pacific market (APR) Yu immediately fell. Japan's Nikkei 225, which rose sharply at the start of the session on December 26, fell 0.3%
. The Chinese stock market has returned to its lowest level since 2014, despite expectations of recovery in the country. The Shanghai Composite fell 0.9%, the Shenzhen Composite 0.8%, the Shanghai blue and the Shanghai CSI 300 indicator 0.7%.
Local experts spoke of the "serious problem", saying the market was feverish because of the fall of the United States.
"The market downturn continues in Asia, the futures on the US indexes are also cheaper.This shows how serious it is.is a concern for investors," quotes the analyst of SBI Securities in Tokyo Hideyuki Suzuki, Bloomberg agency.
Some of the largest stock exchanges in the world do not yet respond to Wall Street events at Christmas. F The stock exchanges of London, Frankfurt, Hong Kong and Australia remain closed and will have to "digest" the recent upheavals at the opening on Thursday, December 27th.
However, already on offers ICE, which opened after the Christmas holidays, the price of a barrel of oil Brent delivered in February fell below the 50 dollar mark, according to experts, this which explains the fall of stock market events in the United States. After oil, the Russian ruble has also fallen a bit. It fell 0.43% to 68.96, close to last week's low of 69.13 since mid-September.
Causes and predators of the crisis
Trump conflict and head of the Federal Reserve Jerome Powell, US The "closure", the extraordinary fall in stocks and desperate measures taken by the Department of Inside the United States to save the Wall Street situation already indicate that the economy is about to experience a crisis. Experts are inclined to believe that the turmoil on the market has provoked the behavior of the US Federal Reserve.
The fact is that in December, the Fed raised interest rates, calling into question President Donald Trump, who insisted on the need to put an end to the strengthening of monetary policy. However, according to J. Powell, "there is a relatively high degree of uncertainty about any further increase – both in the trajectory and in the final level of the rate".
At a press conference, Federal Reserve chief Jerome Powell asked why the Fed had raised rates while inflation had not reached its target and that his own forecasts of the regulator suggest the same situation next year. He replied that this rate hike (the ninth since the central bank began raising rates and the fifth quarterly increase in turn) is justified by a "healthy economy".
According to many financial analysts, reserve managers are struggling with the "overheating of the economy", the compression of dollar liquidity and the crisis that is now preventing serious problems.
