The world's stock exchanges fell: Do you know how much and why?

It is already the sixth day on the line in which the stock market of the United States reports losses, there is concern among investors

The world's stock exchanges fell: Do you know how much and why?

The closing of the stock markets today brought a worrying outlook for investors. The indicators of the largest stock exchanges in the world reported losses, which, although mostly modest, are part of the worst generalized collapse of the year. Everything seems to indicate the Federal Reserve of the United States like the cause of the bad performance of the last days.

Leer en español: Volvieron a caer las bolsas mundiales: ¿Sabes cuánto y por qué?

The Dow index, which groups and measures the performance of 30 of the largest companies in the United States, including Coca-Cola, Procter & Gamble and Apple, closed with losses of 0.4% according to BBC. The other main index, the S & P 500, which does the same for 500 companies, instead of 30, fell 0.65%.

Although the figures for today's close on the US stock markets are modest, they are followed by Wednesday's, some of the worst figures of the year. The NASDAQ index (similar to the S & P 500, but oriented towards technology companies in the United States) recorded a drop of more than 4%, the worst since June 2016, and the S & P 500 fell 3.3%, its worst day since February.

In Europe, the falls were stronger. The main index of the London Stock Exchange, the FTSE 100, fell 1.9%, the same as the CAC 40 index of France, and the DAX index of Germany fell 1.48%.

However, for the Asian markets, the fall was the most drastic. Hong Kong's Hang Seng index reached its lowest point in 19 months, Japan's Nikkei 225 fell 3.9%, its worst decline since March, and China's Shanghai Composite fell 5.2%, leaving it at its lowest peak since 2014.

An answer to the decisions of the 'Fed'

The US markets have had a good year, and in general, they have recovered from the poor performance they presented last year.

Trump's economic policies have been, to a large extent, successful, prompting the chairman of the Federal Reserve System, Jerome Powell, to declare in late September that the economy was going through a 'particularly bright' moment.

Also read: New taxes? How does the trade war change between China and United States

Until September, US interest rates remained low, in order to attract foreign investment and boost the loan in response to a long recession.

A low interest rate means that the big financial capitals will be happy to settle in the country, because they will have to pay less to the financial authorities. However, with the good performance of the US economy so far this year, the Federal Reserve, also called the 'Fed', believes that it is time to raise interest rates, which will control inflation and strengthen the dollar.

For investors, an increase in interest rates represents, in general, a lower return on their financial capital, which means that many will be moving it in search of lower interest rates. This is the main reason why stock markets plummet, an uncertainty about the future of investments in the United States.

LatinAmerican Post | Pedro Bernal
Translated from “Volvieron a caer las bolsas: ¿Sabes cuánto y por qué?”

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