Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

20th Anniversary of 87 Stock Market Crash - Are we revisiting the past?

Stock-Markets / Global Stock Markets Oct 23, 2007 - 09:36 AM GMT

By: Regent_Markets

Stock-Markets Last week the 20 year anniversary of the 1987 crash passed with a significantly negative close for all major stock markets.


A sell off, but it was some way off being a repeat of that day 20 years ago that wiped off 12.2% of the value of British shares in one trading session. It is interesting to note that neither the 1987 or 1929 crashes led to a recession and the Dow actually finished up for the year after the '87 crash. Indeed as of the time of writing the Dow Jones Industrial Average is up 700% from its 87 crash low.

The Nasdaq was again the strongest market relatively (although that wasn't saying much after Friday's rout). Google yet again beat analyst's estimates with increased revenue coming on steam from acquisitions such as You Tube. They now handle 57% of all web searches which is twice as much as Yahoo,
their closest competitor.

Despite the strength in the new economy, the bears have plenty of reasons to fuel the selling we saw on Friday. Oil hit $90 per barrel for the first time ever, Gold continues to surge and the US Dollar hit an all time low against the Euro. Banking stocks fell hard amid concerns that the credit crunch may have even more profound and lasting effects than originally feared. Bank of America reported trading losses brought on primarily by the credit crisis. Despite soaring energy prices, it was the energy giants and oil service handlers that fell hard on Friday due to fears over future earnings. Their sector's weighting in the main indices may have magnified the overall slump.

Two year US treasury notes recorded their biggest weekly gain since 2002 as traders priced in a 70% chance of another Fed cut while the ECB came until renewed pressure from politicians to relax their tightening bias.

For the moment though, US consumers in particular may not feel the immediate pinch of the record oil prices. Mark Zandi of Moody's Economy.com (source CNBC) found that the current oil price is actually $11 below the inflation adjusted high of $101.70. In addition, adjusting for inflation consuming spending is 3% less than in 1980, household income up 42%, median house prices up 40% and pump prices up just 1%.

So in the short term US consumers may be able to weather this storm, but if this price pressure persists coupled with an ever worsening housing market then the lifeblood of the US economy, the consumer will eventually have to tighten their belts.

Wednesday and Thursday's home sales data will help us see how far down the line this scenario actually is. Thursday's crude oil inventories could have a disproportionate effect on the market in light of the current market conditions. The US market's may bounce back in the short term as the selling pressure could be a tad overdone, but the weight of negative economic sentiment may be too much of a wall for this bull market to climb in the intermediate term. A difficult market to call.

The currency markets may therefore offer the better trading opportunity over the next week. With a 70% chance of rate cut already priced into US markets and the ECB not expected to budge this side of Christmas, there is the possibility at least the Dollar could stabilise next week against the Euro between now and the next FOMC meeting at the end of the month. According to traders at BetOnMarkets.com, a no touch 2.5 cents above the current spot price yields 8% over 7 days.

By Karen
Email: editor@my.regentmarkets.com
Tel: +44 1624 678 883

BetOnMarkets.com / BetOnMarkets.co.uk

About Regent Markets Group:   Regent Markets is the world's leading fixed odds financial trading group. Through its main multi-awarding winning websites, BetOnMarkets.com and BetOnMarkets.co.uk, it has established itself as the leading global provider of a unique, powerful way to trade the world's major financial markets. The number, length and variety of trades available to our clients exists nowhere else in the world.   editor@my.regentmarkets.com Tel  (+44) 08000 326 279

Regent Markets Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in