Stock markets all over the world continues to decline. It began yesterday with the Shanghai market. The almost 9% loss in the Chinese market triggered a ripple effect in Europe and later, in the US. From what I remember, occasional declines in market performance are normal. But a sell-off this much in a single day can be very alarming for many investors. Although markets are not expected to bounce back just like that in the coming days, the hope today is that it would all level off soon so that investors would stop hitting the panic button.
What does this mean for us average citizens? The effects on the global economy does not always reach the masses immediately. But the perception of an economy is bad, people tend to believe that it is. Sometimes, far worse than it really is. And for me, a bad economy would eventually translate to the rising of basic goods and services. Meaning, that for the same amount of income, people have less buying power.
All this boils down to the markets’ perception of itself. If fear continues to be the dominating attitude of traders, no economic policy of GMA would instantly counter the slumping of global markets.