© AP Photo / Richard DrewТрейдер on the new York stock exchange© AP Photo / Richard Drew
MOSCOW, Nov 2 — RIA Novosti, Natalia Dembinski. In October the total losses in the equity markets of the United States, Asia and Europe due to large-scale sales has exceeded five trillion euros. This is the biggest collapse since the Lehman Brothers collapse in 2008. The American index S&P 500 ended October with a fall of 8% — the worst result over the last ten years. High-tech Nasdaq decreased by 9.2%, also setting a record since November 2008. While equities MSCI World index, which includes securities traded in 23 countries since the beginning of the year fell by 15%. It is the collapse of stock markets, economists are tied for first place in the list of possible triggers of a new crisis. And the big banks warn that the market has entered a phase of high volatility, the world economy may slide into the abyss as early as 2020.
Why stock markets of the USA began sales? The market shook the news about the possible exit of Italy from the EU, and the murder of journalist Jamal Hasuki the Consulate of Saudi Arabia in Turkey.
But the main reason is investors ‘ fear of rising U.S. interest rates and worsening trade relations between Washington and Beijing. The tightening of the Federal reserve (this year, the us regulator raised the key rate three times) led to higher mortgage rates and, as a consequence — to decrease in volumes of purchase of real estate. A trade war slowed down the Chinese economy.
Interest rates and trade protectionism
That the tightening of monetary policy, the United States will serve as a trigger of a new crisis, previously pointed out one of the largest investment banks in the US Bank of America Merrill Lynch. All this year, investors sell securities in emerging markets. The reason for the rise in interest rates, the fed, strengthening the dollar.
Protectionist policies of Washington is regarded as yet another threat to global financial stability. Trade wars cause enormous damage to international trade, affecting prices and availability of products in the supply chain that hurts the global economy.
«Limitations in the end will result in higher prices for consumers and hamper access to markets for producers in developing countries, which will put additional pressure on food security,» IFPRI.
Well-known American economist and investment banker James Richards indicates that the present rapid growth in the US and European countries leads to epic stock market crash, similar to what happened in 1929-the m to year. And then a prolonged worldwide recession is inevitable.
These concerns analysts believe one reason for the October market collapse.
«Concern that the US economy is on the verge of overheating, led to higher bond yields and caused a powerful wave of volatility in the stock market,» concludes The Wall Street Journal.
And although emerging markets are, as a rule, always the first to suffer from the negative global processes, a recent study by economists from Harvard showed that emerging economies are not as vulnerable to external shocks.
First, countries with a large debt load could transfer the repayment obligations decades into the future on more favorable terms. Second, developing States with high default risk have become resistant to the tightening of monetary policy by reducing trade and budget deficits.
Thus, the crisis in a single economy, even one as big as American, it will not cause uncontrolled chain reaction. Sovereign defaults will become less extensive, more isolated and will not lead to the same systemic consequences.