Fears about China’s slowdown and a coming U.S. interest rate hike have sent global stock markets into a fidgety freefall.
But why? China’s economy has been slowing for years. And the Federal Reserve has long been expected to raise short-term interest rates from near zero, where it’s kept them since 2008. So what’s sowing panic now?
In a word: Uncertainty.
Investors have grown used to near-zero rates and a booming Chinese economy – the world’s second-largest after the United States. No one knows how the global economy will manage without them.
Many investors aren’t waiting to find out. They’ve been dumping stocks with a vengeance. When investors feel unsure about the future, many tend to panic.