When the Two Largest Economies Stumble, the World also Faces the Same Fate
When the U.S. and China's economy went down, the global markets would have no way out but to follow.
Dow Jones had dropped, yet again, 327.23 points or 1.27% to 25,379.45 points on October 18, 2018. The S&P 500 was more or less the same to fell 40.43 points or 1.4%, and Nasdaq, the worst of all, plunged 2.06%.
October had been the crucial month for investors not only in the U.S. but around the world. All the crisis were hitting the markets day by day, plunging bit by bit. There are the U.S.-China trade war, the Fed’s rate hikes, treasury yield, Brexit, and the most recent one, US-Saudi Arabia over the missing Washington Post journalist, Jamal Khashoggi, that led to the sequence of withdrawals from the investment conference in Saudi Arabia.
Meanwhile, across the continent, the Shanghai Composite dropped 2.9% on the same day and hit its lowest level since November 2014, spread fears to investors that the world’s second-largest economy could be slowing down, which will no doubt dragging down global growth along the way.
On the bright side, Goldman Sachs CEO David Solomon said that part of October’s market sell-off driven by programmatic trading.
“There’s no question when you look at last week, some of the selling is the result of programmatic selling because as volatility goes up, some of these algorithms force people to sell,” Solomon told CNBC’s Wilfred Frost. “Market structure can, at times, contribute to volatility and one of the things that we’re spending a bunch of time thinking about at the firm is how changes in market structure over the course of the last 10 years will affect market activity.”
Either way, the contagious had been spread, and the Asian markets on October 19, 2018, were already infected.
At 9:40 in Thailand, NIKKEI plunged 294.87 points or 1.30%, SSEC downed 10.51 points or 0.42%, HSI fell 193.04 points or 0.76%, ASX 200 skidded 19.00 points or 0.32%, and KOSPI slid 15.73 points or 0.73%
There is no escape for SET either. The market falls 2.14 points or 0.13% to 1,680.77 points right after the opening bell.