Fear and panic result in huge declines in the world equity markets
October 25, 2008 by admin
The amount of fear in the market appears to grow on a daily basis as investors try to find a bottom to the stock market. Accross the world equity markets continue to falter as the growing concerns about growth grab the headlines. The amount of money removed from the stock market is almost hard to quantiy as it surpasses trillions of dollars in wealth.
What many economist believe started in the U.S. with the fallout in the housing market is now being felt in countries from Australia to Iran as the world tries to stop the economic slowdown from gaining speed. Oil prices have dropped sharply, despite a recent change by OPEC to slow down production. The decrease in oil prices are likely to be one of the factors that help to restore the economy faster. In addition, the U.S. housing market may finally be closing in on a true bottom as home sales are begining to trend higher.
Mortgage rates finished the week lower for the second week in a row. Combining this with another expected cut in the fed funds rate, the amount of liquidity added to the markets will certainly help assist with a recovery. There is growing speculation that the government will look for an additional stimulus package to help jumpstart the economy. The sooner the U.S. economy turns around, the world markets are likely to follow suit.