How News Lifts – or Sinks – World Stocks
The growth of computerized trading has closely connected all the developed nations and many of the developing nations. A snapshot of the world markets at the end of a recent month illustrates how events in one country influence stock markets everywhere.
In the spring of 2010, Americans grew hopeful that the country was starting to climb out of the worst financial crisis since the Great Depression. The Federal Reserve announced that although American households were not spending as much as before the recession, the U.S economy was slowly improving. Some companies were making a profit from rising consumer demand. Earlier in the recovery, companies had made money by cutting costs. Prices of stock in U.S companies Packard announced that it was buying the smart phone maker Palm.
The credit crisis that America seemed to be emerging from struck Greece, which warned that it might not be able pay off its debts. As a member of the European Union, Greece has adopted the euro as its currency. Other euro countries, like Spain and Portugal, faced financial troubles as well. Standard & Poor’s reduced the bond rating of all three countries. Recently, Standard & Poor reduced United States’ credit rating to AA+.
In an effort to recover, the Greek government enforced an austerity policy that reduced government spending on social programs despite public outrage. Nearly a year later, despite a bailout from the European Union and International Monetary Fund, economists predicted that the only way Greece could get back on its feet would be to restructure its debt, including a program of bond buybacks.