What Are Markets Saying About the World?

Crude oil prices are illustrative of this. After suffering its second sharpest fall of the year, on Wednesday, followed up by another sharp decline on Friday, a barrel of West Texas Intermediate crude is now at its lowest price since late 2021.

Demand for oil is global, making it a barometer for the health of the world’s economy. It often fluctuates with economic news from other parts of the world. When things are booming, oil demand is high, and oil prices typically rise. Such a sharp fall is a warning that investors fear demand will wane if the economy falters.

In other words, it may not be over yet.

For the time being, a semblance of stability has returned, but investors remain on tenterhooks about the potential for more damage to emerge — illustrated by the continued churn in bank stocks.

Asked about the possible risks, some analysts point to other corners of the market susceptible to high interest rates, like the corporate debt market that ballooned after the 2008 financial crisis. The pain in the banking sector could also prompt lenders to pull back from new business, tightening access to a crucial source of cash should companies start to run into trouble — restrictions that could weigh on growth.

And, of course, a big fear for investors is usually that something has yet to be uncovered, like the trouble at a regional bank in Silicon Valley just over a week ago.

Article source: https://www.nytimes.com/2023/03/17/business/stock-markets-economy-banks.html