US stocks and oil prices ended down on Christmas Eve trading on Wall Street. The financial markets turmoil has caused on uneasy way for investors while the stock prises have fallen nearly 20 % from their hights this year in September -meaning that the direction is towards bear markets.
The information that the Treasury Secretary Steven Mnuchin made a call with regulators & banks on Monday was a big signal whether the markets are having systemic risk.
Systemic risk is the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy, says Investopedia. Systemic risk was a major contributor to the financial crises in 2008. Companies considered to be a systemic risk are called “too big to fail.” Lehman Brothers was an example of the systemic risk and for example the Dodd-Frank Act in the US financial markets was created after the Lehman collapse to protect investors.
Also new information may include that Climate Change and its impact for example on insurance and financial companies and their risk management may also lead to systemic risk.
For example the Bank of England´s Governor Mark Carney has said that the Central Bank would include green tests for banks in order to analyse the impact of Climate Change and how the banks are prepared for this risk type. The announcement of the green tests was published in December and the test are expected to start already next year if the Central Bank´s Commitee approves the initiative.
The US Securities and Exchange Commission (SEC) has included the Climate Change impact as part of the company reporting. This means that companies should report the direct and indirect effects of Climate Change in their disclosures.
Dow Jones ended down 2,91 % and was 21 792 points, Nasdaq-index ended down 2,21 % and was 6192 points. The larger S&P 500 -index ended down 2,71 % and was 2351 points. Tomorrow on Tuesday the markets are closed.
Brent oil dropped over 6 % to 50,44 dollars, the lowest level this year in the markets.
In the forex trading the dollar and euro values were about the same level as yesterday. Euro was trading at 1,14 dollars and UK sterling was trading at 1,27 dollars.