The —16 stock market selloff , instigated by global financial events, began in the United States on August 18, , when the Dow Jones Industrial Average fell 33 points and gathered downward momentum over several days, which became a steep selloff on August 21, , falling points 3.
Wall Street suffered a major starting loss on Monday, August 24, as the Dow opened 1, points down. However, the index gained back some of what it had lost to close down points for the day. Volatility continued into due to more fears about China's economy and the result of the United Kingdom's referendum to determine if it would be leaving the European Union. A substantial concern leading to global market instability was the long-term monetary shortfall in Greece leading up to the Greek default on June 30 on an International Monetary Fund loan payment  but the decisive trigger for the end of the bull market was China's stock market crash that began that same June.
However, Irwin also pointed out that investor concerns over a perceived impending end to the U.
Federal Reserve policy of quantitative easing played a major role in the ongoing downturn, along with the collapse of oil prices, which chokes off investment in emerging markets , causing resonating negative global financial effects. The Dow  peaked on May 19, , at approximately 18,  before slowly falling to a low of approx.
The stock market slowly slid after that, reaching a low of 17, The NASDAQ peaked on July 17 at 5, Starting on August 18 August 19 for the Dow the selloff set a trend. The Dow fell 33 points,  0. On Monday, August 24, world stock markets were down substantially, wiping out all gains made in , with interlinked drops in commodities such as oil, which hit a six-year price low , copper, and most of Asian currencies, but the Japanese Yen , losing value against the United States Dollar.
With the stock market plunge on Monday, an estimated ten trillion dollars had been wiped off the books on global markets since June 3.
The 8 percent drop in China on August 24 was termed "Black Monday" by the Chinese state media. In India, the Sensex recorded its biggest single-day fall of 1, The FTSE lost The Dow Jones opened 1, points lower on August 24, but gained nearly half of it back in the first 30 minutes.
The New York Times used the term "upheaval" to describe the market situation. Hedge funds , which, for the most part, had long positions on the eve of the downturn, suffered substantial losses as stocks such as Apple, Citigroup, Facebook and Amazon lost value. Tuesday August 25 was another day of sharp losses on the Shanghai composite index, which dropped 7. In other trading on the 25th, Asian and European markets finished higher, and the day began with a major point upsurge for the Dow; however, the gains turned to losses, with the Dow plunging in the final hour to lose over points for the day, or an overall loss of another 1.
On Wednesday August 26 the Shanghai composite index swung widely and ended down another 1. This was in spite of a cut in the borrowing rate in China. Late the previous day, it was announced that the Chinese legal authorities were investigating Citic Securities , the largest brokerage in the country, for possible lawbreaking in the trading of securities.
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In later trading on August 26, the U. On the following Tuesday, September 1, the SSE Composite index in Shanghai was off 1. S, the Dow dropped to 16, But most markets recovered the next day, Sept. On September 18, , the DJIA plunged points after a brief and partial multi-week recovery the Dow had partially recovered 16, and so had the Nasdaq.
Other selloffs occurred around the world.
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The Nasdaq fell 70 points, the FTSE 65 and the Nikkei The reason was the Fed not hiking interest rates at the September 16—18 meeting. World stock markets continued to fall, with the Dow down to 16, by September 29, This, coupled with other stocks FTSE, Hang Seng Index, Nikkei falling the same or more, set the stage for billions to be lost. In February , British Prime Minister David Cameron announced that the Government was to recommend that the UK should remain in the EU and that the referendum would be held on 23 June, marking the official launch of the campaign.
He also announced that Parliament would enact secondary legislation relating to the European Union Referendum Act on 22 February. With the official launch, ministers of the UK Government were then free to campaign on either side of the argument in a rare exception to Cabinet collective responsibility.
Global markets also recovered. However, when the result for Sunderland was announced, it indicated an unexpected swing to 'leave'. When the London Stock Exchange opened on the morning of 24 June, the FTSE fell from It recovered to The Associated Press called the sudden worldwide stock market decline a stock market crash. Financial markets also reacted negatively to the outcome, with stock markets around the world crashing. The euro fell by almost four percent against the United States dollar, while traditional "safe haven assets" such as gold and the Japanese Yen surged.
Likewise, the Spanish IBEX 35 , Greek ATHEX , Dutch AEX index , Czech PX Index and Polish WIG30 all fell by eight to 15 percent. The Swiss franc , a traditional save haven asset, rose sharply, thus prompting the Swiss National Bank to intervene in the foreign exchange market to cap the rise.
The Swiss National Bank has intervened in the foreign exchange market to stabilise the situation and will remain active in that market. We have contacts with the Swedish banks and other central banks. We are ready to take the necessary actions to handle financial market distortions.
In the Asian-Pacific region, markets also fell, with Nikkei lead the Asian selloff, fell 7. An unnamed policymaker with knowledge of the Reserve Bank of India 's RBI plans for related market management said that it was "prepared to deal with any volatility.
Other traditional markers of uncertainty, such as interbank dollar funding rates in Singapore and Hong Kong, were more steady. Hong Kong Financial Secretary John Tsang said: We have reserved sufficient liquidity and we are able to handle in different situations.
The Singapore stock exchange sought to reduce volatility by raising margins on Nikkei futures traded on its exchange. The Philippines Central Bank issued a statement that read it was closely monitoring the foreign exchange market and would be prepared to act to ensure orderly transactions and smooth volatility.
In the USA, government bonds effectively priced in a small FOMC interest rate cut from a rate increase in July. The referendum result also had an immediate negative economic impact on a number of other countries. However, by September British media had reported that ignoring so-called ' Project Fear ' scaremongering had rewarded those shareholders with the insight to ignore the pessimism after the FTSE broke all records in the months following the referendum to leave the EU.
During a press conference on 27 June , Chancellor of the Exchequer George Osborne attempted to reassure financial markets that the UK economy was not in serious trouble. This came after media reports that a survey by the Institute of Directors suggested that two-thirds of businesses believed that the outcome of the referendum would produce negative results as well as the dropping value of the sterling and the FTSE which began on Friday, 24 June British businesses had also predicted that investment cuts, hiring freezes and redundancies would be necessary to cope with the results of the referendum.
And to companies, large and small, I would say this: By 1 July, the FTSE had risen above pre-referendum levels, indeed, risen further to a ten-month high. Taking the previous fall into account, this represented the index's largest single-week rise since It was expected that the weaker pound would benefit aerospace and defence firms, pharmaceutical companies, and professional services companies; the share prices of these companies were boosted after the EU referendum.
The pound remained low, and became the worst performing currency of the year to date against 31 other major currencies.
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Several politicians have indicated strong personal opinions about the stock market selloff. Merkel stated "China will do everything in its power to stabilize the economic situation.
On the other hand, U. Trump was critical of policies that bound the Chinese and U. Christie commented figuratively that "If the Chinese get a cough, we get the flu. On the day after the referendum, Bank of England Governor Mark Carney told a press conference: The capital requirements of our largest banks are now 10 times higher than before the financial crisis.
The Bank of England has stress-tested those banks against scenarios far more severe than our country currently faces. That substantial capital and huge liquidity gives banks the flexibility they need to continue to lend to UK businesses and households even during challenging times.
The Bank of England is also able to provide substantial liquidity in foreign currency if required. We expect institutions to draw on this funding if and when appropriate. It will take some time for the UK to establish a new relationship with Europe and the rest of the world. So some market and economic volatility can be expected as this process unfolds, but we are well prepared for this. Her Majesty's Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have remained in close contact including through the night and this morning.
The Bank of England will not hesitate to take additional measure as required, as markets adjust. All of the Big Three credit rating agencies reacted negatively to the vote: Fears of a crash in property values led investors to begin redeeming investments in property funds , prompting Standard Life to freeze trading on 4 July, and Aviva followed suit the next day. On 12 July, the global investment management company BlackRock predicted the UK would experience a recession in late or early as a result of the vote to leave the EU, and that economic growth would slow down for at least five years because of a reduction in UK investment.
The group's chief economic adviser, Peter Soencer, also argued there would be more long-term implications, and that the UK "may have to adjust to a permanent reduction in the size of the economy, compared to the trend that seemed possible prior to the vote". On 20 July, a report released by the Bank of England said that although uncertainty had risen "markedly" since the referendum, it was yet to see evidence of a sharp economic decline as a consequence.
However, around a third of contacts surveyed for the report expected there to be "some negative impact" over the following year. From Wikipedia, the free encyclopedia.
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