World markets drop as Federal Reserve announces stimulus decrease

16:26, 19 August 2021
World markets drop as Federal Reserve announces stimulus decrease Photo: Liau Chung-ren/ Look Press

Indexes all over the world reacted sharply to the arising fears over the Federal Reserve’s scaling down of the stimulus program which has been aiding the American markets for over a year. 

The Federal Reserve announced that it is viewing the tapering of bond purchases as a possibility while US inflation stays at almost record-highs.

 Major American indexes fell considerably following the news with the S&P 500 being down by -1.07%, Dow Jones Industrial Average by -1.08%, and the Nasdaq Composite index by -0,89%.

Vanguard’s ETF on emerging markets plunged as much as -2%.

The French stock market index benchmark CAC 40 dropped by -2.62%, the UK’s FTSE 100by -1.98, and the German DAX by -1.87%. 

This may be the start of the long-awaited market correction coming after the bullish market driven by US stimulus after the market’s sharp drop in March 2020 when the S&P lost almost half of its value, followed by an almost 100% increase to date. 

Earlier, the Golden Dragon index that contains as much as 98 of the biggest Chinese firms listed in the US has dropped significantly after Chinese regulators issued new laws for anti-competitive behavior. 

The Chinese stock market has been in a downfall for the last few months because of the communist government’s crackdown on Chinese tech giants like Alibaba and Tencent.

Among the industries that suffered more than others is the private tutoring sector with the Chinese private education company TAL losing as much as 94% of its value.