As we all know inflation has been at an all-time high in several big economies like the United States.
This has led the Fed to come up with a monetary policy to bring stability to the economy and give more buying power to the dollar.
Interest rates are seriously on the hawkish side with the Fed maintaining its stand on increasing interest rates even up to 75 basis points by July 2022.
The dollar index has seen a massive surge in price due to these hawkish moves by the fed. On the other hand, we see a massive drop in the stock market and the Indices Market.
Why the stock market is crashing
A recession is a part of the economic cycle. There are several factors that indicate an economy has been plunged into a recession. We see companies laying off employees massively, reporting low-income profits as opposed to their target profits, companies declaring bankruptcy, massive unemployment, reduced demand for goods and services, a reduced buying power of the dollar, little money in circulation, etc.
We are already seeing a couple of these already happening, and this has caused investors to take out their investments from these companies to place them in safer havens like gold, or other income assets that could give them good value for their money like the dollar (due to the high-interest rates), hence why the stock market is down alongside the indices market.
However, it is worthy of note that, we are not in a recession yet, but all indications point to the fact that we are heading in that direction.
All fingers are crossed at this time, with investors keenly watching the market and waiting for market directions to make their move.
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