After a tumultuous Christmas Eve that saw the Dow Jones Industrial Average lose over 650 points in just half a day of trading, many American investors spent the overnight hours nervously watching the Asian markets for signs that the worst may not be over yet.
After two years of record-breaking performance, the American stock markets are headed for a disastrous December, which may end up being the worst December in history. Since the markets peaked at the end of September, the DJIA, NASDAQ and S&P indexes have all lost about 20 percent of their value. All three markets lost over 2 percent of their value on the disastrous half day of trading on Christmas Eve alone.
President Donald Trump reacted to the poor half day of trading by again criticizing Federal Reserve Chairman Jerome Powell for raising interest rates too quickly. American presidents have typically refrained from such sustained, open criticism of the Federal Reserve, out of respect for its independence, but President Trump has defended his remarks, and some unconfirmed reports have suggested that Trump has considered firing Powell.
Many analysts blamed the Christmas Eve market instability on an unexpected Sunday statement from Treasury Secretary Steven Mnuchin, which caused many traders to fear the possibility of a potential banking liquidity crisis similar to the one that contributed to the financial crash of 2008.
Asian markets responded to the news from America with mixed messages. The Japanese Nikkei 225 posted an astonishing loss of over 5 percent of its total value, but other Asian markets (including the main indexes in China and Taiwan) posted more modest losses of around or less than 1 percent of their total market value. Overall, most of the Asian markets are on pace to end 2018 with overall losses of over 10 percent of their total value.
Overall, it remains difficult to predict how American markets will react when trading resumes after Christmas, and whether the current stock plunge represents an ordinary market response to slower-than-expected economic growth, or whether it portends a longer future period of economic sluggishness similar to the worldwide recession of 2008.