10 Large Market Crashes since 1900
The COVID-19 outbreak has brought panic, fear and uncertainty to all corners of the globe, with the world’s markets being massively hit as businesses have closed until further notice, travel has ceased and trading has become extremely difficult with employees advised to work from home leading to an inevitable large drop in sales.
Crashes as a result of events like this are rare, but not unheard of. The financial markets have seen many ups and downs over the years however it is currently unclear how the market will respond once the outbreak is declared over. For guidance, we can only look to the past for previous instances of drops and crashes. Therefore, here are 10 large market crashes since 1900.
1) Panic of 1901
The New York Stock Exchange was officially founded in 1792 and brought years of prosperity to the newly formed nation of the United States. However, in 1901 the market saw its first real crash over financial control of the Northern Pacific Railway, This coupled with the assassination of US President William McKinley led to three years of uncertainty and drought which left many small investors struggling or failing to survive.
2) The Great Depression 1929
In comparison however, the Panic of 1901 was a drop in the ocean compared to what would happen between the World Wars. On 29th October 1929, now known as Black Tuesday, share prices on the New York Stock Exchange collapsed, losing $14 billion in one day. This coupled with rising unemployment, low wages and struggling agriculture was the catalyst for what became the Great Depression in the 1930’s and beyond.
3) 1973-74 UK Stock Market crash
The early to mid 1970’s saw a big recession across the world with the devaluation of the US dollar and actions taken by US President Richard Nixon. The issues were particularly bad in the UK as oil prices skyrocketed, miners went on strike for better wages and rights and London Stock Exchange's FT 30 saw almost three quarters of their value drop. The bear market would see citizens reduced to candles for light and warmth and spell the end of Edward Heath’s time as Prime Minister.
4) Black Monday 1987
Through a supposed combination of tensions between the USA and Iran, drops in oil prices and a slowdown in the US economy in Ronald Reagan’s final years, the Dow Jones Index, along with many other markets around the world saw it’s biggest drop in history on 19th October 1987, known as Black Monday, which was seen as the the first crash of the modern financial system.
5) Black Wednesday 1992
In one of the darkest days of John Major’s time as Prime Minister of the UK, on September 16th 1992, while holding Presidency of the European Communities, the London Stock Exchange saw a losses of what would be revealed later as £3.3 billion, leading to devaluation of the Pound below the lower currency exchange limit mandated by the European Exchange Rate Mechanism. The UK would leave the ERM that day and is seen by some as the initial catalyst for the UK’s leaving of the EU.
6) 1997 Asian Financial Crisis
The Asian crisis began in Thailand in 1997 as foreign investors lost confidence in the country over its rising debt. This fear would spread to other countries in the region, impacting currency values, as well as countries such as Brazil & Russia and would eventually lead to a drop in economies around the world. The crisis would spill into 1998 and Asia would not see a real upturn until 1999.
Almost 20 years later the impact of the 9/11 terrorist attacks in the US are still being felt around the world and some will never be the same again. In relation to the markets, it is estimated that approximately $40 billion was lost as a result of the events in insurances losses alone, as well as spikes in oil and gas prices and drops in all financial markets around the world amid the confusion and fear of what occurred that day.
8) 2008 Financial Crisis
The global financial crisis in the autumn of 2008 was perhaps one of the most devastating of recent times. As banks were allowed to engage in hedge fund trading interest rates reset leading to house prices dropping dramatically and markets falling around the world. Several banks had to rely on government bailouts just to survive with several companies such as Lehman Brothers in the US collapsing entirely as the after effects slowed down the markets for several years.
9) 2010 European sovereign debt crisis
With fears around the mounting debt crisis, coupled with the UK general election and the return to government of David Cameron’s Conservative party, May 6th 2010 as what is known as a ‘flash crash’ as Dow Jones, the S&P 500 and NASDAQ falling dramatically in the space of a couple of hours. Theories behind the dip include human error or cyberattacks and resulted in further uncertainty around Europe for several months.
10) 2015 Chinese stock market crash
After a slow and successful rise over several years following major selloffs in Shanghai in 2007, during the summer of 2015 till early 2016, the Chinese Stock Market saw major drops leading to an estimated $3 trillion of mainland shares sales. In January 2016 this set off a wave of selling globally which lasted for several months. Following further falls in January 2017, the Chinese market has remained stable until the outbreak of COVID-19 in December 2019.
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