Heavy Selling and Widespread Panic Sign of Bad Times
There have been a number of major falls for equity markets over the last century, and while each varies in longevity and consequences they can all be categorised by heavy selling and widespread panic.
Major financial crashes have included:
Higher interest rates in the US led to the collapse of the risky sub-prime mortgage market and increasing numbers of people defaulting on loans. Credit fears rocked world markets and on August 16 the FTSE 100 Index slumped more than four per cent - its worst one day percentage fall since March 2003.
Falls over the month saw central banks pump cash into money markets to free up liquidity to keep the banking system afloat as uncertainties over the extent of losses from the sub-prime market left banks guarded and reluctant to lend to each other.
February 27, 2007
The FTSE 100 slumped by 148.6 points - its biggest one-day drop in almost nine months, as markets across the globe plunged in reaction to speculation that China may put in place measures to curb its economic growth. The situation was compounded by warnings from former US Federal Reserve chief Alan Greenspan that the United States may be on the verge of recession.
The Dow Jones fell by 3.3 per cent, or 416 points - the worst slide since September 11 2001 - prompting the Footsie to fall a further 114.6 points the following day. More than pounds 64 billion was wiped from the value of blue-chip shares in the space of two days.
London's blue-chip stocks lost around 600 points in the weeks following the terrorist attack in the United States, with shares hitting a four year low as nervous dealers off loaded shares.
On Wall Street the Dow slid 6.9 per cent when trading resumed after the four day break following the September 11 attacks.
Interest rate cuts by central banks failed to calm the markets and corporate profit warnings added to the sense of panic. Trading was so volatile that at one point, the London stock exchange computer system collapsed, leaving jittery traders in the dark about the direction of the market.
The stock market fell in love with the fast growing internet sector during the 1990s, with investors throwing money at so-called dot.com pioneers.
In the new world climate anything seemed possible and share prices soared. …