What is in Store for World Market With the Current Credit Ratings
Many experts on stock markets feel that the sudden downfall of the U.S credit rating can ultimately lead the entire world stock market as well as economy to disastrous end. Some also feel that we have just began to see a “global margin call” that may ultimately ravish the global market.
In just one week the Dow Jones Industrial Average plunged over 631 points at 5.52% on Monday after falling by 6% during the preceding week. Global sell off in the stock market started getting complicated and uglier as the margin calls triggered off many more liquidations.
Situation did not improve on Tuesday either and there was a bad opening and there is always the danger of margin call turning the correction into a full-fledged crash of the world market.
According to experts like Gilani, it is the market’s mechanics that poses the greatest danger since 98% of the investors including the professionals are not able to understand. More margin calls will mean more problems and the period of recovery would be stretched much longer wherever the market bottoms out.
Perhaps understanding the risks involved, the United States Reserve Bank has come up with the announcement that the interest rates will not be increased during the next two years. It only remains to be seen how it affects the market in the next few days though there are initial signs of improvements.
It is obvious that the next week or two would be most important for the stock market.
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