Black monday

Monday October 19th 1987 when Wall Street had its worst day since 1914. The Dow Jones Industrial Average fell 508 points from 2,247 to 1,738, or 22.6%. This triggered panic selling in equity markets around the world and, for example, on the same day the UK's all-share index fell 9-7% from 1,190 to 1,075, then dropped a further 11% the following day. Until that point 1987 had been a great year for equities. From the start of the year until its mid-August peak, the Dow rose 44%. However, rising interest rates caused investors to worry and the German Bundesbank's decision to increase its rates on October 16th was the cue for them to dash for the exit.

The Dow bounced back rapidly from its low. On October 26th alone it put on 10%. The UK index, however, continued to fall and did not bottom out until December 3rd, when it closed at 750, 39% below its mid-year peak.