Black Monday: 1987's Stock Market Crash When The World Lost $1.7 Trillion
By | October 17, 2020
Our history books are filled with details about the big stock market crash of 1929, known as Black Tuesday, that plunged the United States into the Great Depression, but stock market crashes occur so regularly that you can practically set your watch by them. Its impact might not have been quite so Steinbeckian, but Black Monday, the stock market crash of 1987, affected all 23 of the world's largest national stock markets.
A Day of Drops
In the United States, the stock market plummeted by more than 20% on October 19, 1987, but the effects of the Black Monday crash varied wildly from country to country. Hong Kong, Singapore, and Australia were hit especially hard, with falls of more than 40%, while Austria scraped by with only an 11.4% decline.
This led to a correspondingly variable response to the crash, depending on just how much of a hit the country in question had taken. For example, the central banks of the United States, Japan, and Germany took bold steps to help their economies recover, while the Reserve Bank of New Zealand, whose stock market had only seen a 15% drop on Black Monday (or Black Tuesday, in their time zone), opted not to relax their monetary policies. As a result, by February, their market had lost more than half of its value, and the crash ended up contributing greatly to the ensuing six-year recession in New Zealand.
With stock prices around the world in a free fall, the worldwide losses from Black Monday were staggering. It has been estimated that global financial losses topped more than $1.7 trillion U.S. dollars. Economists feared that the crash would trigger another Great Depression or, at the very least, a long-term period of economic instability.