Panic on the flour…

Earlier today, the market was shaken by one of the (if not the) biggest plunge in the history of all the indicators : Dow Jones, S&P 500, Nasdaq… Was it the consequence of the European debt crisis ? Or another black Mondaybut on a Thursday – like in 2008 ?

No, it apparently all started with… a typo. One of the trader entered a amount in billions instead of millions on a stock considered as a reference, this quasi-instantly drove the Dow Jones down. Responding to this, the automatic and electronic trading algorithm sprang in action driving the Dow down and the panic up.

As for the humans, their first thought was “Greece”… but this time now, nothing to do with Greece.

This episode tells us several things : first, as we already know, the market can react quickly in a very emotional way. Then, not every financial low moment is related to Greece…

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3 Comments on “Panic on the flour…”

  1. […] Let’s start with the economy : Greece asked last week to activate the European rescue plan, which has been put together during the last. However, the markets are still not relieved ; it is now the risk of contagion that worries, despite the European summit at the end of the week and the declaration of the European Central Bank (thought those were a bit of disappointment). [*,*,*,*] Portugal is sometimes considered as the next in line [*] and the euro gets down to record lows  – below $1.26 at the end of the week. Financial markets fear a new crisis, which make the exchanges volatiles and unstable.[*,*] […]

  2. […] Commençons par le volet économique : La Grèce a demandé la semaine dernière l’activation du plan d’aide Européen, celui-ci se mit donc en place tout au long de la semaine. Cependant, les marchés ne sont toujours pas rassurés : c’est maintenant le risque de contagion qui inquiète, malgré le sommet des dirigeants de l’Eurozone et les déclarations de la BCE (qui ont un peu déçus). [*,*,*,*] Le Portugal est parfois considéré comme le prochain sur la liste [*] et la monnaie unique descend jusqu’à des valeurs records – l’euro est passé en dessous des $1.26 en fin de semaine. Les marchés financiers sont dans la peur d’une nouvelle crise se qui rend les échanges volatiles et instables [*,*] […]

  3. […] a comment » Remember: on May 6th, the American markets experienced a short and unexplained free fall. A great number of possible explanations have been presented : spelling mistake (or fat finger), […]


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