This was due to fears of contagion of the European sovereign debt crisis to Spain and Italy, as well as concerns over France's current AAA rating,[1] concerns over the slow economic growth of the United States and its credit rating being downgraded.
In August 2011, investors lost trillions due to many different variables causing the stock market to fall.
[2] There was a debt crisis in Europe, uninspiring economic news, and a bust to U.S. credit rating which caused a fear of double dip recession.
[3] Investors wanted to find safer ways to invest their money due to the 11 percent stock market fall in two weeks.
[4] As the market was falling, the United States and Europe were failing to fix the economic crisis occurring.
[13] Japan: On 4 August, the Japanese government intervened in currency markets in order to combat the overvalued state of the Yen by spending between ¥400 billion and ¥500 billion to help achieve and maintain an exchange rate of roughly US$1 to ¥80, a level seen as crucial to help exporters compete.
[20] But continued interest by foreign investors to buy Swiss francs, especially after the announcement of the Federal Reserve to freeze US interest rates for 2 years, led to record high strength of the Swiss franc of 70.85 centimes to the US dollar on 9 August.
[26] Trading on 9 August led to more losses, as the EGX30 fell to a 5% low, prompting a 30-minute freeze on activity, before recommencing with a drop to 5.75%, followed by a steady rebound to close at 4.75% down with 4,478 points.
[27] The Saudi markets experiencing similar loss to 4.27%, while Dubai and Abu Dhabi closed at a lower 1.95% and 1.34% dip respectively.
Canada: On 4 August, the Toronto Stock Exchange lost 435.90 points or 3.4% following the American markets and fear of overseas debt problems.
It was the biggest fall in a single day since 22 October 2008 (at the peak of the Financial crisis of 2007–08), when Bovespa fell 10.18%.
[38] Belgium, France, Greece, Italy, Spain: On 11 August (with the exception of Greece on 8 August), the market authorities of Belgium, Italy, France and Spain as well as the European financial regulator ESMA announced the ban of all forms of short selling on banks and other financial companies as a result of growing instability in markets on rumours of French banks risking downgrades and concerns of various European banks that are highly exposed to indebted nations such as Greece.