Wednesday 15th October was a “crazy” day for the markets. In total, £46bn was wiped of the stock market, and the FTSE 100 (the index composed of the 100 largest companies on the London Stock exchange) fell by 2.8%.
This is the lowest dip since the summer of 2013 and although the financial market recovered slightly the following day, it is still almost 10% down on its peak in early September 2014.
So why has the stock market crashed so suddenly?
Political problems in Greece
The Greek economy is still fragile and as the country faces a political crisis, share prices are struggling. David Madden, an analyst at IG, said: “It looks like we are entering another phase of the eurozone debt crisis.”
Global fall in demand
The outlook for leading world economies such as America, China and Germany tends to set the pace for global share prices. Unfortunately in America, poor retail figures and a slow pace of manufacturing has seen the economy slide in recent months. In Germany – the eurozone’s biggest economy – exports and growth forecasts have fallen considerably. This is a sign of a global fall in demand and investors are worried about taking financial risks.
The news that this deadly virus is beginning to spread is sparking fears that it could significantly impact global financial markets. Investors are becoming increasingly nervous of this global threat to health and security and as a result are selling shares.