Financial markets in the US and in Asia (and all over the world, actually) were affected by the very real prospect of the United States Federal Reserve increasing its interest rates, as well as a drop in oil.
The stocks in the US fell lower than they have been for two months. Dow Jones, for instance, saw its Industrial Average drop over 300 points. The shares of developing countries have been on a rather long fall too.
In its worst week all year, oil fell to $36 a barrel. Junk bonds suffered a terrible day too.
In short, it is all a big pile of misfortune as there is nothing that the common people like you and I can inherently do. The Chinese were smart enough to lower the value of their currency as they predicted the heightened interest rate by the Federal Reserve, hence resulting in the dollar strengthening. The global growth as a whole is progressing in a fairly uncertain manner.
Financial markets all over the world are in a state of instability as the interest rates from the United States Federal Reserve are set to increase. Prices of commodities have fallen to their lowest in about 16 years. This is rather disconcerting. There is speculation all over that the weakened Chinese economy will affect other nations’ economies a great deal.
Various stocks in the United States and Asia have been adversely affected. The Standard & Poor’s 500 Index, for example, fell by nearly 2 percent. It was at its lowest since mid-October. It fell even further this week, down to 3.8 percent. This s the lowest it has been since near the end of August. This drop was a result of Asian (Chinese) and European economy weakening and the anticipation that it would spread to the United States.
The continuing decline in the commodity prices is adversely affecting credit markets. The adverse effects on the credit markets lead to similarly adverse effects on equities. It is one big adverse chain reaction. To make it even worse, there isn’t a lot of room for error when some of these things occur.
The drop in Asian stocks saw the Chinese Yuan drop to the lowest level it has been at in over four years. This too is a result in dropping oil prices as well as the whole Federal Reserve interest rate increase. As you can see, this stress in the financial markets is coming from two fronts.
The United States and Asia (China) are not the only ones affected. In Europe, Germany’s DAX, Britain’s FTSE and France’s CAC have also been affected very greatly.
Back in China, the PBOC (People’s Bank of China) carried on devaluing its currency. This has seen the value of the Yuan against the dollar depreciate to its lowest point since mid-2011. The decision by the powers that be in China to devalue their currency gradually has many speculating that the economy is much more brittle than initially thought. The Yuan rate index introduced by China against a number of peers has also brought about further strain on the Yuan.