Global stock market turmoil:Nifty down 895 Points Post Budget

By | February 6, 2018

Dow plunges 1,175 — worst point decline in history.It was the scariest day on Wall Street in years.

Its not just US market, Markets all over the world are tanking

As the Saying Goes “The bull walks up the stairs and the bear jumps out the window”

 

Reason for Global Sell off

Valuations

Stocks have been rising pretty much in a straight line since November 2016, S&P 500 has gone 403 sessions without a 5% correction, Nifty has done for 400 sessions.Lots of traders were becoming complacent and hence we got the much needed correction for the moving averages to do a catch up.

A cooling-off period would be a good thing. It would make stocks cheaper and more attractive to investors, especially if the underlying companies are healthy.

 

Rising interest rates

When the Fed raises rates, the cost of borrowing money increases. That means companies have to pay more for their loans, which cuts into corporate profits. It also means Americans will pay more for mortgages and loans.

Investors believe Trump policies to stoke growth are going to work so well that they will overheat the economy, and force the Federal Reserve to try to slow things down by raising interest rates faster than expected.

When interest rates rise sharply, stocks often fall. Investors worry that businesses’ profit parade will slow down.

 

Super Blue Blood Moon Effect

Blood moon ignites bloodbath in stocks

Last week, we saw an extremely rare type of full moon. The super blue blood moon is actually a confluence of three lunar events all happening at the same time. Below, we explain the components that make up a super blue blood moon.

1. A supermoon takes place when the moon is at the point in its orbit which is closest to the Earth, making it appear 14 percent bigger and 30 percent brighter than a regular full moon.

2. A blue moon is the second full moon in one calendar month.

3. A blood moon occurs when the full moon appears red during a total lunar eclipse.

Each one of these is an uncommon kind of full moon. Thus, all three occurring at the same time is an unusual and historic event and generally leads to big fall in markets.

Why are U.S. Market impacts global markets?

The U.S. is the world’s largest economy and home to the biggest financial markets on the planet. The dollar is the currency of reference for investors around the world.What happens on Wall Street almost inevitably ripples around the globe. Last Financial Crisis in 2008 also started from US.

 

 

 

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