The American stock market remained under pressure for the fourth consecutive week. The S&P 500 index fell by more than 2.50 percent last week, reducing the market cap by more than $1 trillion i.e. Rs 94 lakh crore. In fact, ever since the war between Iran and Israel started. Since then there is pressure in the S&P 500 index. In the last one month, this index has fallen by 5.83 percent, due to which the market cap of the index has reduced by more than 3 trillion dollars.
US stock market shares closed down for the fourth consecutive week — the longest losing streak in a year. The benchmark S&P 500 closed below its 200-day moving average on Thursday, Bloomberg reports; This is an important level of the overall health of the market, due to which forced selling can begin.
Why did the American stock market fall?
According to stock market experts, the US stock market is falling due to low expectations of an early end to the US-Iran war. Crude oil prices have increased due to the prolonged US-Iran war, due to which the fear of inflation has increased again and central banks have no scope left to reduce interest rates.
The market is bracing for increased volatility as about $5.7 trillion of options tied to individual stocks, indexes and exchange-traded funds were set to expire on Friday. Traders call this quarterly phenomenon triple-witching; This phenomenon is known to cause sudden price fluctuations as large exposures to derivatives are suddenly lost. Citigroup Inc. According to data available since 1996, this figure of options expiring on Friday is the largest figure so far in the month of March.
pause button on interest rates
Lowering interest rates will boost the economy and investment prices, and President Donald Trump is continuously demanding to reduce these rates in anger. Before the US and Israel launched a war against Iran, traders were betting heavily that the Federal Reserve (Fed) would cut interest rates at least twice this year. But by reducing interest rates, there remains a risk of inflation worsening further.
Now that oil prices have become so high, investors feel that central banks around the world have little scope left to reduce interest rates to help their economies. Apart from the Federal Reserve, the central banks of Europe, Japan and the United Kingdom also kept their interest rates stable last week.
Iran continued attacks on Arab states in the Persian Gulf, while Israel indicated it would refrain from attacking the Islamic Republic’s energy infrastructure. Axios reports that the US is considering plans to seize Kharg Island, Iran’s main oil-export hub, in order to pressure Tehran to reopen the Strait of Hormuz.