Washington/London/Tokyo: Share markets the world over crashed for the second day is succession because of the indications of increase in interest rates by the United States central bank, the ‘Federal Reserve’ and rising inflation. The slide in the United States stock market is being strongly echoed in the European and the Asian countries, while investors and the companies have lost billions of dollars, forecasted by the analysts. This slide marked the end of the bullish trend in the markets seen over the past few months and this can possibly have an effect on the world economy, it is predicted.
Last year, the United States ‘Federal Reserve’ increased the interest rate to 1.25%. Following this, there was a positivity in the United States’ economy and the employment numbers and the incomes for the companies displayed a major increase. The effects of these were reflected on the stock market. Only last month, ‘Dow Jones Index’, known to be one of the oldest index, had taken a record leap up to 25000 points. This was the first time that the ‘Dow Jones’ crossed the 25000 points mark.
In view of these positive changes, the sources connected with the ‘Federal Reserve’ had indicated a fresh increase in the indices. It was predicted that ‘Federal Reserve’ will announce a four-fold increase in the interest rates, which is up to 3%. The fear of this major increase in the interest rates invoked a strong reaction in the stock market. At the end of the last week, the ‘Dow Jones’ index slid by 665 points.
On Monday, the investors gave an extreme reaction and there was a flurry of sellers in the market. Due to this, the ‘Dow Jones’ crashed by 4.6% in a single day. This is the biggest crash in ‘Dow Jones’ since August 2011. This sentiment echoed in the ‘S&P 500’ index and ’NASDAQ’ share markets also. ‘S&P 500’ and ’NASDAQ’ crashed by 4.1% and 3.7%, respectively.
A strong reaction, to the United States stock market crash, was seen in the Asian and European countries. The Japanese ‘Nikkei 225’ crashed by 7% and ‘Hang Seng Index’ of Hong Kong crashed by 5%. The South Korean share market by was down by 2.5%, whereas the indices in Australia and Singapore came down by 3%. The Indian share market investors had to bear losses to the tune of $ 5 trillion in accordance to the forecast.
In Europe, the cities of London, Paris and Frankfurt share indices have seen a crash of more than 3%.