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“Black Monday” Sends Shockwaves Through World Stock Markets

“Black Monday” Sends Shockwaves Through World Stock Markets

Global stock markets have lost hundreds of billions of dollars following China’s “Black Monday.” Virtually every world market was affected, including Asian, European and U.S. indexes. At one point, the Dow Jones dropped over 1,000 points. Chinese stocks suffered an 8.5% overall drop, the biggest fall seen on that market since 2007. European stocks also suffered; the FTSeurofirst 300 index lost $521 billion, which was their biggest loss since 2008. In the U.S., the panic is likely to continue in the coming week. The VIX index (also known as the Fear Index) rose 67% to its highest level since January of 2009. The prices of commodities took huge hits also, and oil currently stands at $39 per barrel.

Former U.S. Treasury secretary, Larry Summers believes the Federal Reserve will now try to ease monetary policy, rather than raise the interest rate as expected. He said, “It is far from clear that the next Fed move will be a tightening.” As news was coming in of the global response to the crash in China, he commented, “We could be in the early stage of a very serious situation.” U.S. technology stocks were most affected, with, at one point, Facebook down 14% and Apple down 11%. Additionally, General Electric and Pepsi were also down more than 20% during the day.

Through Twitter, Paul Mason, the U.K. economic journalist, commented, “Markets slump as world realizes main growth engine in hands of incompetent, secretive police state that thinks it can dictate equity prices”; many analysts are sharing that view. Coupled with the uncertainty over U.S. interest rate hikes, markets are looking increasingly unstable. If you are concerned that all of this needs to be addressed by Obama’s government immediately, please Like & Share this post.

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