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2011-03-15

The Chain of Unfortunate Events Struck the Stock Market

The first hit on a weak global economy recovery was the re-appearing of European debt problems. Then as it turned out after revised estimate of the fourth quarter, the US economy grew 2.8% instead of 2.9% during 2010. Next, the uprisings in the Middle East induced oil prices to surge. A soaring oil price caused the fear of inflation. The market reaction to oil price overshadowed the good news of US improving labor market.

China normally has a trade surplus with the world but this time it reported a significant trade deficit for February. Higher prices for oil and other commodities increased its imports and decreased exports, raising concerns about Chinese inflation and growth. All above was enough to scare the bull but even more was set to come.

The natural disaster in Japan added a big portion of negativity to the stock market. Now investors are so concerned by a fragile global economy. Disrupting global supply and the estimates of an infrastructure damage show that the losses are disturbing. Evidently, this disaster is going to bring huge economical consequences to a global economy.

Worries might continue to dominate the market for a while. However, no matter what happens, fear always exceeds a possible realistic impact of any event. Hopefully, Japan's catastrophe will be the last one in the series of bad events of this year. To a natural law of harmonic balance, April, as a corporate reporting month, might bring some good news to the stock market. By the way, US job market is gradually healing - the unemployment rate is the lowest since April 2009.