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Panic engulfs global stock markets
October 6, 2008
World markets suffered massive losses Monday, striking four-year lows, as panic-stricken investors doubted whether a Wall Street bailout package would stem the global financial crisis.
London, Frankfurt and Paris all tumbled more than six percent approaching the half-way mark while a 15-percent dive in Moscow forced a halt to Russian trading.
“We have a seriously weak and fear driven market at our hands,” said Tom Hougaard, chief market strategist at City Index.
“It is anyone’s guess where we will end the day.”
Investors dumped shares after US stock markets had fallen sharply on Friday, despite US congressional approval of a 700-billion-dollar bank bailout.
On Monday, Tokyo ended down 4.25 percent as Hong Kong’s stock market shed 5.0 percent, Seoul tumbled 4.3 percent and Sydney lost 3.3 percent. Shanghai dived 5.23 percent and Mumbai was down 5.58 percent in late afternoon trade.
European stocks plummeted after Germany’s fourth biggest bank had to be rescued over the weekend — news that pushed the euro to a 13-month low against the dollar on Monday.
Crude oil futures tumbled to eight-month lows below 90 dollars a barrel in London and New York as worsening financial turmoil triggered fears about slowing demand for energy.
“The market is not convinced that the US bailout package can protect the economy from the financial crisis,” said Toyo Securities strategist Ryuta Otsuka.
The Saudi stock market, the largest in the Arab world, shed 9.6 percent at the opening on Monday after a week-long holiday, and shares in other energy-rich Gulf states also slumped.
“The Fed’s bailout plan may have been passed on Friday but so far there’s been no real reaction in credit markets and because of this the natural assumption is going to be that the measures won’t work, even if such a call is rather premature,” CMC Markets dealer Matt Buckland added.
Underscoring the worsening conditions in the United States, the world’s largest economy, 159,000 US jobs were lost in September, according to government figures published Friday.
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