Time of fear: what is unique about the instability on the stock exchanges in 2022

Market analysts and investors often find the times in which they live unique. History has at least four "black Mondays" (a sharp one-day stock market fall. -). They got their name by analogy with "Black Thursday", which in 1929 marked the collapse of Wall Street and became the beginning of the Great Depression (the global economic crisis from 1929 to 1939. -). At the same time, the days of sell-offs on the stock exchanges in 1987 and 2015, which were also dubbed “black”, did not have consequences. Many other market downturns were forgotten altogether. The 25-year period, which lasted until 2007, was so unremarkable in terms of turmoil for the stock markets that it was dubbed the "great calm". The financial crisis of 2008-2009 did rock the markets, but it was again followed by the usual series of loud but transient downturns.

The situation in the stock markets in 2022 is extremely unstable. Since the beginning of the year, the NASDAQ Composite index of high-tech companies has fallen by almost 30%. And this is not the end - the turmoil continues. Just at the moment when the steady growth of inflation caused concern among investors, RUSSIA launched a military special operation in Ukraine. As a result, commodity prices jumped, and central banks were forced to raise interest rates. China's economic growth is slowing down due to a zero tolerance policy for covid-19 .

But how unusual is the current situation? To assess its uniqueness, financial firm Buttonwood examined three indicators of market uncertainty: expected fluctuations in asset values, discrepancies in economic forecasts, and the unpredictability of economic policies reported in the media. Research shows that we do indeed live in unusual times.