Rising US unemployment to 4.5% triggered a sharp decline in global financial markets. Asian markets fell, with Japan down 13% and South Korea down 9.5%. Cryptocurrencies also suffered. An emergency Fed meeting is expected to consider lowering interest rates, which may help stabilize the situation.
The US stock market lost more than $1.93 trillion today.
On the Causes of the Global Financial Market Crash:
The unemployment rate in the US has reached 4.5%, the highest level since the COVID crisis. Global markets responded immediately. The US, rather than China, is the driving force and indicator of the global economy. This news broke on Friday, and now markets are beginning to react: the first to respond were the Asian markets. There has been a sharp decline in Japan and South Korea. The Japanese market fell by 13%, nearly the largest drop since 1987. One of Japan’s major exchanges even suspended trading. The South Korean market experienced a 9.5% drop, which is also significant.
My favorite crypto market hasn’t been left out: Bitcoin is currently falling, and there have been liquidations amounting to over a billion dollars in the last 24 hours. The crisis is gradually sweeping across the globe. Europe, especially London, is already feeling the effects of this recession. We will now watch the reaction of the US stock market, particularly the S&P 500 index. Note that the S&P 500 recently hit an all-time high of $4,500.
As I mentioned, the cryptocurrency market is also affected. I don’t think this will go unnoticed. The US may take emergency measures: a meeting of the Federal Reserve is expected, where a decision to lower interest rates might be made. This is akin to the Central Bank’s rate in Russia, intended to stimulate the economy. The Federal Reserve, in its attempt to fight inflation, may have gone too far, leading to the current market situation.
Moreover, this situation unfolds against a backdrop of tense geopolitical conditions, including rumors of possible aggression from Iran. All of this, of course, does not contribute to market optimism. It’s possible that, as before, the situation will be resolved diplomatically, and the markets will begin to recover their losses.
Russia
The traditional Russian view is that the worse things are in America, the better things are in Russia. But I have to disappoint you: the Russian economy is much more dependent on the state of the American and global economy than you might think. Export revenues from oil sales are the main source of income. Brent crude oil has fallen to $77 per barrel. A further deepening of the recession and crisis in the United States will lead to an even greater fall in oil prices, since a sluggish economy requires less oil. Low oil prices will negatively affect the income of the Russian Federation, which, in turn, will affect ordinary Russians.
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