Today at some place in the world, the stocks are going up and down on a market pendulum. This pendulum of fluctuations affects the world with the click of a number. Numbers crunch and the economy groans as the numbers fall. One of the strong economic countries is struggling in the market, China. Kitchen reports, “…Chinese resource firms taking another hit…casino stocks falling sharply” (1). The stock market has tumbled in China. This fall causes a ripple throughout the world.
The ripple effect of the stock market falling in China will touch the West with a hiccup in the US market. The NYSE Dow was down 72.43 today due to a fall in overall stock most likely due to the rumbling market in the East and Europe. The markets are contingent on each other’s country market to fall sharply or gain. The bumpy ride will last a while with the world markets tumbling.
The markets are already struggling due to the economy. Companies are closing, defaulting, and failing to make the profit margins. The negative financial reports of companies are straining the economy before the China stock crisis even occurred. The world markets ripple but the US was already struggling. This will be another strain that will take a long toll on gains in the stock market’s future.
Another issue to think about is the debt that China has and holds. China controls companies in its localized area to which rely on stocks to sell and grow but China also controls companies globally. China has always had money to loan to Europe or the US. China pretty much owns America because America would borrow from China for goods. The ripple effect would take away the borrowing power that America has with purchasing goods. Some say that America does not need to borrow so much and maybe this should be an eye opener for America relying so much on China.
Then, there is the selling of stocks. Whenever the market is fluctuating, the buyers and sellers go crazy. The stock buyers are buying at the low cost at what they think will be the lowest stock price (the biggest drop of price), so that when the stocks go up, they will make money. Then, the scared sellers are selling because they forecast the stock falling beyond their limit of comfort. A large group of sellers will look at the markets all over the world and try to sell before the stocks hit the all time low that will cause them to lose money beyond their perceived recovery point.
The rumble and tumble of China’s stocks affect the West and European markets. The stock market will be touchy in the next few weeks or months depending on how low they go! The pendulum is ticking and the world is watching as the numbers crunch.
Kitchen, Michael. (2011, October 19). Hong Kong Stock Fall, as Resources, Casinos Drop. Market Watch. 1. Retrieved from www.marketwatch.com
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