Friday's stock market sell-off continued into this week, with the S&P 500 falling by about 4.1 percent on Monday and the Dow Jones Industrial Average dropping by 1,175 points, or about 4.6 percent. It's not just American equities that have seen a decline, though — several international indexes have fallen as well. Clearly, international investors are spooked by sudden sharp slides in U.S. equities.
On Monday, according to MSCI, the MSCI Emerging Markets Index fell by nearly 1.75 percent; the MSCI EAFE Index, which tracks companies in Europe, Australasia and the Far East, was down 1.7 percent; while Japan's Nikkei 225 dropped by 4.9 percent. The latter has fallen by another 4.73 percent so far today.
Clearly, the U.S. sell-off is impacting international stocks, but some experts think that more damage could be done to global equities if this rout continues.
"When the U.S. sneezes, the rest of the world catches a cold," says Mona Mahajan, a U.S. investment strategist with New York's Allianz Global Investors. "If the U.S. is selling off, then that nervousness could spread."
While all sorts of things could go awry over the coming weeks and months, there are three risks in particular that could cause global equities to continue falling.