Black Monday: As Trump’s Tariff Moves Spark Global Panic, Let's Recall What Happened On October 19, 1987

Black Monday, 19 October 1987: Stock markets around the globe suffered a dramatic crash, with the US Dow Jones Industrial Average plummeting by 22.6% in a single day - the largest one-day percentage fall in its history.

Now, fast forward to 2025. On Sunday, 6 April 2025, American television personality and market commentator Jim Cramer issued a stark warning of a possible repeat of such a "bloodbath" on Monday, 7 April.

He attributed this to President Donald Trump's aggressive tariff policies, which have unsettled markets worldwide. Cramer urged the US President to engage with countries that have not retaliated with tariffs, seemingly to help avert another global market meltdown.

Why did Cramer urge Trump to 'reach out to countries that play by the rules'? What caused the 1987 Black Monday crash? And what exactly happened? Here's a breakdown:

What happened on Black Monday?

On 19 October 1987 - the day infamously remembered as 'Black Monday' - the Dow Jones Industrial Average plunged by 22.6% in a single trading session.

This catastrophic drop sparked a global stock market collapse and is now regarded as one of the most notorious days in financial history. The S&P 500 index fared even worse, falling by a staggering 30%.

The financial chaos continued for weeks, and by early November 1987, most of the world's key stock indices had lost more than 20% of their value, reported LiveMint.

What led to the Black Monday crash in 1987?

The crash wasn't caused by a single event but rather a perfect storm of contributing factors:

* An overheated bull market in need of correction: The market had surged since 1982, tripling in value. By 1987, many analysts believed a correction was overdue.

* Rise of computerised trading: Though still relatively new, algorithmic trading played a significant role. Programmed trades kicked in automatically once certain thresholds were reached, creating a domino effect. As prices dipped, these programmes triggered massive sell orders, fuelling a downward spiral and widespread panic.

* Triple Witching effect: On Friday, 16 October 1987 - just before Black Monday - the simultaneous expiry of stock options, stock index futures, and stock index options (a phenomenon known as "triple witching") created extreme volatility in the final hour of trading. This turmoil extended into after-hours markets and carried over into Monday, amplifying the crash.

Black Monday 2.0 on horizon?

Analysts have raised concerns of a possible repeat, following the worst US trading session since the COVID-19 pandemic on Friday, 4 April. More than $5 trillion was wiped off global market capitalisation, with key indices posting heavy losses.
What did Jim Cramer say?

Cramer warned: "If the president doesn't attempt to engage with and reward the countries and companies that follow the rules, then the scenario from 1987 - where we fell over three consecutive days, culminating in a 22% plunge on Monday - becomes alarmingly plausible."

As of Sunday, 6 April, Dow Jones futures had fallen by 1,405 points (3.7%), signalling a rough start to the week. S&P 500 futures dropped 4.3%, while Nasdaq-100 futures nosedived 5.4%, with investors scrambling to liquidate tech stocks in a rush for cash.