Can Anything Stop The Unstoppable Stock Market? Well Yes…
The stock market is an indestructible force of nature. A relentless machine that grinds on regardless of the world around it. But even this juggernaut can be brought to a halt. Today, we’ll explore a few times that’s happened before jumping into our regular overview of the week ahead. Let’s do this!
#1 Natural disasters
When a major storm, earthquake, or other natural disaster strikes, it can cause widespread damage to property and infrastructure, disrupting businesses and disrupting supply chains. This can lead to economic uncertainty and a decline in investor confidence, triggering a stock market sell-off.
In 2011, the Japanese earthquake and tsunami caused the Tokyo Stock Exchange to close for a week. In 2005, Hurricane Katrina caused the New York Stock Exchange to close for two days.
#2 Terrorist attacks
Terrorist attacks can also have a significant impact on the stock market. Terrorist attacks are designed to create fear and uncertainty, which can cause investors to sell their stocks.
This can lead to a market crash, as was seen after the September 11, 2001, terrorist attacks, which led to a $1.4 trillion loss in stock market value. The stock market was also closed.
S&P 500 Index, the impact of 9/11
Source: Macrotrends
#3 Political upheaval
Political turmoil can also cause stock markets to close. When there’s a change of government or civil unrest, investors may not be confident in the stability of a country. This can lead to a sell-off, which can trigger a market crash.
One example of this was in 2016, when the UK’s vote to leave the European Union causing the FTSE 100 to fall by over 10%.
FTSE 100, Impact of “Brexit” vote
Source: Yahoo Finance
#4 Financial crises
When a financial crisis occurs, there follows an obvious and very sudden loss of confidence in the financial system. This can lead to a liquidity crisis, as banks and other financial institutions become unable to lend money to each other, which can cause a chain reaction of defaults, leading to a complete collapse of the financial system. AKA “total meltdown”.
The most famous example of a financial crisis that caused the stock market to close is the Great Depression. The stock market crash of 1929 was followed by a decade of economic hardship, which led to the closure of the New York Stock Exchange for four days in 1933.
Dow Jones Industrial Average, following the 1929 Wall Street Crash
Source: Macrotrends
#5 Jolly holidays
Unless you were a total trading newbie, you probably expected to see this on the list. The other examples on this list are random, freak events. Holidays are structured, methodical and planned way in advance. They vary from exchange to exchange, largely depending on public holidays, so make sure you study up!
It’s always a good idea to ensure you add these holidays to your calendar, so you aren’t caught short when the time comes. Download our FREE financial calendar and get these dates in your diary!
Have your say!
Were any of these events show-stoppers for you? How did they affect your trades? How do you prepare for freak closures? Get in touch with us on X at @_contentworks.
Top fundamental events week commencing 22/01/24
Monday
No major events are planned.
Tuesday
● AUD — NAB Business Confidence
● JPY — BoJ Interest Rate Decision
Wednesday
● JPY — Balance of Trade
● EUR — German HCOB Manufacturing PMI Flash
● CAD — BoC Interest Rate Decision; BoC Monetary Policy Report
Thursday
● EUR — German Ifo Business Climate; ECB Interest Rate Decision; ECB Press Conference
● USD — Deposit Facility Rate; Durable Goods Orders; GDP Growth Rate QoQ Adv
Friday
● EUE — German GfK Consumer Confidence
● USD — Core PCE Price Index MoM; Personal Income; Personal Spending MoM
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Speak soon!
The Contentworks team
