Chinanews Client Beijing, March 9th (Xie Yiguan) On Monday (9th), the U.S. stock market opened up sharply. The S & P 500 index once fell 7%, triggering the first layer of fuse mechanism, and suspended trading for 15 minutes.
According to media reports such as the Daily Economic News, this is the second meltdown in the history of US stocks. The last meltdown of US stocks was on October 27, 1997. The Dow Jones Industrial Index plummeted 7.18%, the largest decline since 1915.
On the 9th, the Dow fell 3.37%, the Nasdaq fell 7.21%, and the S & P 500 index fell 5.88%. At the beginning of the trading day, the decline rapidly expanded. The Dow once fell nearly 8%, and it leaked more than 2,000 points and fell below 24,000 points. The Nasdaq once fell more than 7% and fell below the 8000 mark. 7% trigger the fusing mechanism.
After the resumption of US stock trading, the decline in the three major stock indexes narrowed. At press time, the Dow fell 5.71% and recovered 24,000 points; the Nasdaq fell 5.42% and returned above 8000; the S & P 500 index fell 5.67%.
European and American stock market major stock indexes fell intraday.
What is the fuse mechanism?
The fusing mechanism, also known as the automatic suspension mechanism, refers to the suspension of trading measures adopted by the exchange to control risks when the volatility of the stock index reaches the specified fusing point.
The fusing mechanism adopted in foreign exchanges generally has two forms, namely "melt and break" and "melt and continuous"; the former refers to the suspension of trading for a period of time after the price reaches the fuse point, and the latter refers to the price After reaching the fuse point, the sales declarations continued to be aggregated within the fuse price range for the subsequent period.
On October 19, 1987, the largest crash in the history of the New York stock market broke out in the United States. The Dow Jones Industrial Index fell 22.6% in one day. Due to the lack of a fuse mechanism and limits on the rise and fall, many millionaires overnight became Poor, this day is also known as "Black Monday" by the US financial community.
On October 19, 1988, the US Commodity Futures Trading Commission and the Securities and Exchange Commission approved the circuit breaker mechanisms of the New York Stock Exchange and the Chicago Mercantile Exchange.
According to relevant US regulations, when the S & P index falls by 7% in a short period of time, trading in all US securities markets will be suspended for 15 minutes. At present, in the US trading hours and non-US trading hours, and even some stocks, the United States has a fuse mechanism.
What causes US stocks to plummet?
Analysis believes that as investors are further worried that the epidemic will damage the global supply chain and bring the economy into recession, US stocks experienced a roller coaster market last week, and Saudi Arabia once again started a crude oil price war on the weekend as the trigger for the global financial market's plunge. The sharp decline in the opening of US stocks may signal further turbulence in the future.
According to foreign media reports, on Saturday (March 7) Saudi Arabia sharply reduced the price of crude oil sold to foreign markets such as Europe, the Far East and the United States, with the largest discount in more than 20 years to attract foreign refineries to purchase Saudi crude oil.
Chris Rupkey, an economist at Mitsubishi UFJ Financial, said: "The plan to lower oil prices will bring more cash to people's hands, which will boost consumer spending and boost the economy, but the move seems to be The stock market's blow to investors has not been eased. Wall Street's woes could have a negative impact on the economy. "
As of press time, the Dow has fallen more than 14% this year, the Nasdaq has fallen more than 9%, and the S & P 500 has fallen nearly 13%. The 10-year US Treasury yield fell below 0.5% to 0.456% for the first time, hitting a record low again, while the 30-year US Treasury yield fell below 1% to 0.870%.
Financial markets plummet not just U.S. stocks
Saudi Arabia ’s reduction in export oil prices and a sharp increase in production have triggered an “oil price war”. Combined with factors such as demand concerns caused by the new crown epidemic, the main international oil price contract opened on the 9th and fell more than 30%. Assets pulled back sharply.
Crude oil futures and other intraday losses.
Goldman Sachs analysts said in the latest report that the price of Brent crude could drop as low as $ 20 per barrel, which will test some oil producers. "The price war has completely changed the outlook for the oil and gas market. Goldman Sachs lowered its oil price forecasts for the second and third quarters to $ 30 a barrel."
Jin Jiarui, a senior analyst of Jinlianchuang Crude Oil, believes that due to the superimposition of negative factors, oil prices have not fallen to the end, and it is likely to be within 25 dollars in the end.
Affected by this crude oil price war, the Asia-Pacific stock market fell sharply on the 9th. The Nikkei 225 Index closed down 5.07%, the Korea Composite Index closed down 4.19%, and the Hong Kong stock Hang Seng Index fell more than 4%. European stock markets were not immune. As of press time, the British FTSE 100 index fell 6.31%, the French CAC40 index fell 6.49%, and the German DAX index fell 6.59%.
Jiang Chao, chief economist of Haitong Securities, pointed out that the fundamental reasons for the soaring financial markets are the lack of momentum in global economic growth, limited policy space, and high previous market valuations. In this context, in the event of an emergency, large fluctuations in global financial markets can easily be triggered. (Finish)