When moments move marketsWhen moments move markets: how have seismic political and economic events impacted key financial markets? Take a better position with CMC Markets.
The collapse of Lehman Brothers was a seminal moment in the financial crisis, one which almost brought the global economy to its knees. The sharp fall in the FTSE 100 in the wake of the bank’s failure prompted a rethink from policymakers as to how best support the banking system. This briefly helped to arrest a three-day slide that saw 500 points wiped off the equity benchmark, a fall of nearly 10%.
This speech by European Central Bank (ECB) president, Mario Draghi, marked an important moment in the eurozone debt crisis. It was the first time that any ECB official had openly stated the central bank would stand behind the euro, and effectively act as a proxy lender of last resort when markets were speculating about the prospect of a redenomination risk and possible breakup of the euro.
In the run up to voting day, a number of opinion polls were leaning towards the ‘Remain’ campaign winning the vote. The rise in the pound reflected this prediction, while betting markets also moved in line. The drop in the value of the pound as a result of early ‘Leave’ wins revealed how badly positioned the market was in relation to the final Brexit vote, and also that the outcome had huge potential for political disruption.
In the lead up to the presidential vote, many mainstream economists considered a Donald Trump win undesirable, given some of his economically illiterate policies. When Trump won in spite of the odds, it prompted a sharp downward slide not only in global markets, but also the US 30. The downward lurch proved to be short-lived after investors reassessed his policies, concluding they were likely to have a stimulative effect in the short- to medium-term.
Cryptocurrencies have always invited a great deal of scepticism, partly because they are so poorly regulated. Nonetheless, interest in bitcoin and blockchain technology increased throughout 2017, prompting a wave of buying. Yield-starved investors poured money into what was widely perceived as a significant step forward in a new technology, resulting in warnings that people would get burnt in a very illiquid market. These warnings came true at the end of 2017, when the bubble eventually popped, causing prices to tumble over the next two months.
The Cambridge Analytica scandal brought to light how social media companies collected customer data through the use of cookies and privacy settings. This revelation, along with Facebook’s reluctance to acknowledge a wider problem, prompted concerns that governments could issue new regulation based on the use of customer data for target advertising. Consequently, it resulted in a sharp sell-off in Facebook’s share price of 15% in two weeks.
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