Special Feature
October 27, 1997 Mini-Crash The Western economies were, however, able to avoid the worst of the crisis as their exposure to the bad loans of the all but bankrupt regional banks in Asia was minimal. Still, the mini-crash that occurred on that day led all global markets substantially lower. In New York, the NYSE was halted twice to avoid continuing panic selling, but the loss at the end of the day still amounted to a serious 7.2%.
The crash occurring on October 27, 1997 is probably one of the least known in recent years, but it had its origin in the Asian currency crisis and carried out many a professional fund manager operating in that region. The day certainly didn’t start well in Asia with the Hang Seng index alone dropping 6%. Nerves got the better of traders in the region with continued worries over the regional property market and the collapsing of domestic currencies.
CHART - 1997 MINI-CRASH During the following sessions, the Hang Seng Index continued the drop but this was not followed by US markets and, in the end, the Dow Jones ended the year with a 22.6% gain and the event was seem-ingly swiftly forgotten.
This meant that overseas markets, and in particular Europe, took the brunt of selling that the US fund managers were unable to implement in their home market. Over the course of a few days, UK & European markets lost around 20%.
9/11 Twin Towers Aftermath Crash
The US markets re-opened on Monday, September 17 and it was very evident that a crash would occur. In the initial event, the drop was remarkably contained in the US, considering how much overseas markets had tumbled. The Dow closed down 684.81 points on the Monday, corresponding to a loss in value of 7.13%.
The biggest difference between this particular crash and the others is that in the immediate aftermath of the atrocities, people knew what was coming in the markets. The terrorist attacks occurred on the morning of September 11, 2001, just before the markets actually opened in New York, and such was the devastation and confusion that a decision was taken by the NYSE officials to keep the markets closed.
The losses did, however, extend over the balance of the week and the Dow accumulated a decline of 14% over five consecutive negative sessions. Airlines and insurers were heavy losers on September 14.
32 | www.financial-spread-betting.com | January 2013