How will the slumping US stock market affect the global economic recovery?

摘要

The decline of the US stock market has begun to speed up over the last month with almost a quarter having been wiped off the value of many blue chip stocks, a decline likened to that of the notorious 'Black Monday' of 1987. Accountancy scandals, questionable profits and the fragility of the US economic recovery have made investors think twice about buying US stocks. As a result, over the month of July the Dow Jones Industrial Average has experienced its worst two-week drop since the 1987 crash.The close relationship between the US Dow Jones Industrial Average and UK FSTE 100 index has led to a mirrored decline of UK stocks. Many of the multinational corporations involved in the accounting scandals are also based in the UK, and as such investors have begun to pull out of their European positions too. As a result, other European bourses have also declined with investors becoming increasingly uncertain about the near-term economic outlook across the region. The Japanese Nikkei 225 index has also declined, although not as sharply as European financial markets.