Wednesday, February 28, 2024
By Steven L. Taylor

Via Reuters: Global stocks slide deepens in Europe, volatility soars

Steep losses in global stock markets accelerated in Asia and Europe on Wednesday as Wall St recorded its biggest drop since the September 11, 2024 attacks on the United States and as volatility measures skyrocketed.

European shares extended Tuesday’s slide by up to 2 percent within an hour of the opening bell moving into negative territory for the year to date.

Such a cascade is hardly a surprise given how things started in China yesterday and then moved on to NY–the question is:  how long will it last?

More from the BBC: World stock slump hits second day

Worldwide share prices have continued to fall, triggered by Tuesday’s 9% losses on the Shanghai stock market.

The UK’s FTSE 100 index fell by 1% in morning trading. That took declines in the past two sessions to 3.2% and knocked £52bn off its total value.

France’s Cac 40 index dropped by 1% and Germany’s Dax lost 1.1%. Earlier, markets in Asia, Australia and India had all suffered substantial losses.

Investors are questioning the outlook for economic and earnings growth.

Meanwhile, the NYT notes: Asian Markets Fall Again on Worries About U.S. Economy

Both mainland Chinese markets rose nearly 4 percent today after state-controlled media reported that the government might allow greater foreign investment in Chinese stocks and would not impose capital gains taxes on stocks soon.

Stock markets elsewhere fared much worse on Wednesday.

In Tokyo, the benchmark Nikkei 225 index plunged 4.1 percent in early trading before recovering slightly to end the day down 2.9 percent.

In Hong Kong, the Hang Seng Index fell 2.5 percent on Wednesday. It also showed a slight recovery from heavier losses in morning trading.

Practically every other stock index in Asia outside of mainland China also fell.

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2 Responses to “Fun with the Global Economy”

  • el
  • pt
    1. Steven Plunk Says:

      It’s my understanding the initial fall in Shanghai was a reaction to the rumor of a caital gains tax being imposed. That fall coupled with Greenspan’s comments (which were not as bad as reported) really frightened investors in the US. Then we had a failure of the trading system when the buy orders bottlenecked while the sell orders did not. It was something of a perfect storm that should have been prevented.

      Given all that the herd promptly panicked.

    2. Buckland Says:

      China banking system has a huge problem on their hands with Non Performing Loans. China admits to roughly 15% of loans at their banks to be NPL, concensus estimates puts the number at 25%, while some analysts put the number as high as 50%. Some perspective: In the US S&L debacle of the 80′s our banking system peaked at about 4% NPL, Japan went into a 15 year recession when they hit 11% from which they have only recently recovered. This is the issue that has the potential to strangle the Chinese economy, not possible captial gains taxes.

      This will be huge in the decades ahead. A China that can’t grow at 10%+/year can’t keep the economy ahead of the folks coming off the farm for a better life in the cities. If they can’t deal with the 7 million /year that leave the farm then unrest breaks out.

      It’s easy to focus on places in the world where Americans are getting shot at. However developments over the next decade in China will do more to determine the world our children live in then anything happening in Europe or the Middle East. Unfortunately it’s just not the trendy part of the world right now

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