March 17, 2008
Global markets plunged Monday on news that JPMorgan Chase, backed by the U.S. government, had to rescue troubled Bear Stearns and investors struggled to gauge how much worse financial markets could get.
“Its difficult to call where the bottom is,” said Richard Hunter, a broker at Hargreaves Lansdown in London.
Oil prices hit a record in Asian trading, U.S. stock index futures fell sharply and the dollar hit record lows.
JPMorgan said Sunday it would buy Bear Stearns for $236.2 million — $2 a share — in a stunning fall for one of the world’s largest and most venerable investment banks. The bank was dragged down by its exposure to bad mortgages, the same burden that has led to more than $150 billion in write-downs worldwide.
The Bank of England on Monday offered an extra 5 billion pounds — around $10.1 billion — of reserves for short-term money markets because of the dire conditions.
The U.K.’s benchmark FTSE 100 dipped 2.5 percent to 5,493.8 while France’s CAC 40 slid 2.7 percent to 4,473.39. Germany’s DAX slipped 3.4 percent. Financials were especially hard hit, with Switzerland’s UBS down 14.5 percent.
The head of the International Monetary Fund said Monday that the global financial crisis is more serious and more widespread than even a few weeks ago.
The “economic environment is still worsening,” said Dominique Strauss-Kahn.
Strauss-Kahn urged a global response, though he said central banks have been handling the crisis well.
Investors, however, were stunned by the latest bout of very bad news from Wall Street.
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