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The Global Financial Meltdown was initially seen as western issue with a global name especially in Nigeria, Africa and other developing countries. The ranking of Nigeria as one of the ten least vulnerable economies further boosted the confidence of investors in its capital market. Subsequent events proved many financial analysts wrong as market indices in the Nigerian capital market deteriorated persistently for several months in what appears to be the most catastrophic experience since its inception. To say the least, the effect of the crisis on the Nigeria Capital Market was colossal; There was massive withdrawals of Foreign Portfolio investment with local investors following suit. The study shows that there is a two way causality,between the Capital market of the United States and the Nigeria Capital Market, with a higher causality from the U.S financial market to the Nigerian Capital Market than vice versa. This further showed the vulnerability of the Nigerian stock Exchange to external shocks and distortions; thus the effect of the global crisis on the Nigerian Capital Market was devastating.
