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Jun 3

Wall Street Drops on News out of China

Posted by Bill at 08:05 | News | Comments(2) | Reads(5049)
For the week ending June 3, 2011, Wall Street dropped sharply on news out of the US, mainland China, and Hong Kong. Many investors are worried about the slowdown in these economy’s and the effect it is going to have on earnings.

The Chinese stock market witnessed a 9% correction, which in turn sent the US markets lower and caused the Dow Jones industrials to lose more than 120 points.

china financial newsMore than one stock analysis believes that there is a major correction coming sometime in the near future, if the worldwide economies do not show an improvement soon. The former Feb chairperson Alan Greenspan, also released a statement, where he stated he “believed the US economy could be headed for a recession”, which did not help the stock markets.

The shares of stocks listed on the Hong Kong stock exchange also dipped last week, and that was started by the shipping firm China Merchants Holdings. They issued a statement that said, ‘they believe the worldwide economic forecast would lead to slower growth than they initially expected in the near future”. The Hang Seng Index dropped 1.6%, or 372.59 points to finally close the day at 23,253.84.

Many investors are worried about the Chinese government stepping in and trying to cool down its booming economy and runaway inflation by raising interest rates once again this year.  Because of this, the Shanghai Composite Index fell 8.8% to close at 2 771,79, which was it largest decline since 1997.

The Standard & Poor's index reported flat home sales throughout the nation in December, and the US Commerce Department stated that orders for durable goods dropped in January to its lowest level in three months.

Many analyses in China believe that an increase in interest rates, and a decrease in the availability of capital will eventually put the brakes on the economy, which will only further exasperate the problems the stock markets are presently experiencing.

China has the largest uptapped investment potential of our times, however, unusual risk exists for overseas investors due to political or cultural reasons, protect your investment by subscribing China stock market news.

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