Stock Markets Fall On Slowdown Concerns
While stock markets across the world have been performing very well of late, today has seen a sharp reversal in all of the major markets of the world. So is the party over, or are we seeing a short term reality check?
The spark for the fall in world markets was the Chinese market, where rumours of government intervention together with worries about a possible slowdown in the economy triggered a heavy bout of profit taking. While regular reality checks can often help to refocus the mind, there are concerns that a fall in Chinese demand will hit many worldwide industries such as mining, power and technology - all areas which the recent growth in the Chinese economy has helped to support.
As expected, both European and American markets reacted negatively to the 9% fall in the Chinese market, with the UK market down nearly 150 points, and the Dow Jones down over 400 points. Further falls are expected tomorrow, but the next few days will be very important for investors - will the falls continue, or will markets stabilise at lower levels?
While many having been highlighting the potential for a slowdown in the US economy and tension between the likes of the US and Iran, the negative feed back from the Chinese market seems to have hit home. Both the US and UK housing markets are flying high, at a point when personal debt has never been higher, and recent confirmation of negative US savings figures i.e. US consumers are using their savings to fund their retail spending sprees, does not bode well for the short term.
Tricky times ahead, but we have been here before and there is no need to panic as yet…..
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