Stocks plunge worldwide as US bailout fails to steel investors ~ There is all-out panic over spread of crisis
Source: AFP, 6-10-2008
NEW YORK: Global stock markets reeled Monday, shaken by massive sell-offs by panicked investors who fear a much-vaunted US finance sector bailout will fail to end a crippling credit crisis. "There is all-out panic," said ING senior strategist Adrian van Tiggelen. "Everyone had hoped that after the acceptance of the package in the US and the bailouts in Europe, things would calm down but in effect, there are still strong fears of the domino effect."
On Wall Street, the Dow Jones Industrial Average fell below the key psychological level of 10,000 points for the first time since October 2004. The Dow was down 4.02 percent at 9,910.66 points at mid-day.
The slide in the Dow accelerated huge losses in Europe, with markets in London, Paris and Frankfurt all plunging between 7 and 9 percent. Asian exchanges earlier in the day also closed deeply in negative territory.
"There is a crisis of confidence," said Patrick O'Hare at Briefing.com of the declines on Wall Street. "Quite simply, there is a reluctance to believe the financial relief plan will produce a quick fix for the global financial system and global economy."
Investors dumped shares after US markets fell sharply on Friday despite US congressional approval of a $700 billion dollar plan for the government to take on some of the soured US bank debt that has sparked a global credit squeeze.
"Markets are looking ugly around the globe. Investors are voting on the bailout plan with their feet. The crisis is now accelerating," said Barry Ritholtz at Ritholtz Research & Analytics.
European equities were rattled by fresh troubles after a weekend meeting of the leaders of France, Britain, Germany and Italy failed a produce a joint European financial rescue package.
"There's a massive lack of confidence," said Hargreaves Lansdown analyst Keith Bowman. "The overriding factor is the difficulties we saw in Europe over the weekend. Added to that, although we did see the US bailout package voted for successfully on Friday, there are still a number of questions and concerns in terms of its timing and implementation."
The London FTSE 100 index of leading shares fell 7.85 percent to 4,589.19, while in Paris the CAC 40 shed 9.04 percent, its heaviest one-day loss since its creation in 1988, to 3,711.98.
Frankfurt's DAX fell 7.07 percent to 5,387.01. In Dublin the Irish stock exchange's main ISEQ index ended with a loss of 9.59 percent at 3,565.54.
Markets in Amsterdam, Madrid, Milan and Brussels were down between 6.0 and 9.14 percent at the end of the day.
Iceland's stock market suspended trading in all financial shares - including three major banks - on Monday amid government talks on a possible rescue for the banking sector.
Russia's dollar-denominated RTS bourse suffered its worst-ever one-day fall, closing down 19.10 percent, a spokesman told AFP. "It was the biggest one-day fall" ever, the spokesman said after the index closed at 866.39, down 65 percent down from an all-time high posted in May this year. Nordic markets also took a beating. Some analysts said the financial troubles were spreading, making it harder for government authorities to stop the rot.
"European governments are rushing to the rescue of their financial institutions, which are still stymied by a seizure in bank lending. Problems are being uncovered among the largest US insurers, who are being stung by losses in their investment portfolios," said Chris Lafakis at Economy.com. "Insurers are now joining financial institutions in the hunt for capital. US equities are hemorrhaging as the problems in the global financial system threaten to drag the world into recession."
European stocks were also affected after Germany's fourth biggest bank, Hypo Real Estate, had to be rescued afresh over the weekend - news that helped push the euro to a 13-month low against the dollar. France's BNP Paribas, meanwhile, announced Sunday that it was taking control of the operations of ailing financial group Fortis in Belgium and Luxembourg.
Markets were looking ahead to a meeting Friday of finance chiefs from the Group of Seven rich nations, waiting for any announcements on coordinated action such as liquidity injections or interest rate cuts, dealers said. A speech Tuesday by US Federal Reserve Chairman Ben Bernanke would also be closely watched for any clues on the possibility of a US interest rate cut, they said.
NEW YORK: Global stock markets reeled Monday, shaken by massive sell-offs by panicked investors who fear a much-vaunted US finance sector bailout will fail to end a crippling credit crisis. "There is all-out panic," said ING senior strategist Adrian van Tiggelen. "Everyone had hoped that after the acceptance of the package in the US and the bailouts in Europe, things would calm down but in effect, there are still strong fears of the domino effect."
On Wall Street, the Dow Jones Industrial Average fell below the key psychological level of 10,000 points for the first time since October 2004. The Dow was down 4.02 percent at 9,910.66 points at mid-day.
The slide in the Dow accelerated huge losses in Europe, with markets in London, Paris and Frankfurt all plunging between 7 and 9 percent. Asian exchanges earlier in the day also closed deeply in negative territory.
"There is a crisis of confidence," said Patrick O'Hare at Briefing.com of the declines on Wall Street. "Quite simply, there is a reluctance to believe the financial relief plan will produce a quick fix for the global financial system and global economy."
Investors dumped shares after US markets fell sharply on Friday despite US congressional approval of a $700 billion dollar plan for the government to take on some of the soured US bank debt that has sparked a global credit squeeze.
"Markets are looking ugly around the globe. Investors are voting on the bailout plan with their feet. The crisis is now accelerating," said Barry Ritholtz at Ritholtz Research & Analytics.
European equities were rattled by fresh troubles after a weekend meeting of the leaders of France, Britain, Germany and Italy failed a produce a joint European financial rescue package.
"There's a massive lack of confidence," said Hargreaves Lansdown analyst Keith Bowman. "The overriding factor is the difficulties we saw in Europe over the weekend. Added to that, although we did see the US bailout package voted for successfully on Friday, there are still a number of questions and concerns in terms of its timing and implementation."
The London FTSE 100 index of leading shares fell 7.85 percent to 4,589.19, while in Paris the CAC 40 shed 9.04 percent, its heaviest one-day loss since its creation in 1988, to 3,711.98.
Frankfurt's DAX fell 7.07 percent to 5,387.01. In Dublin the Irish stock exchange's main ISEQ index ended with a loss of 9.59 percent at 3,565.54.
Markets in Amsterdam, Madrid, Milan and Brussels were down between 6.0 and 9.14 percent at the end of the day.
Iceland's stock market suspended trading in all financial shares - including three major banks - on Monday amid government talks on a possible rescue for the banking sector.
Russia's dollar-denominated RTS bourse suffered its worst-ever one-day fall, closing down 19.10 percent, a spokesman told AFP. "It was the biggest one-day fall" ever, the spokesman said after the index closed at 866.39, down 65 percent down from an all-time high posted in May this year. Nordic markets also took a beating. Some analysts said the financial troubles were spreading, making it harder for government authorities to stop the rot.
"European governments are rushing to the rescue of their financial institutions, which are still stymied by a seizure in bank lending. Problems are being uncovered among the largest US insurers, who are being stung by losses in their investment portfolios," said Chris Lafakis at Economy.com. "Insurers are now joining financial institutions in the hunt for capital. US equities are hemorrhaging as the problems in the global financial system threaten to drag the world into recession."
European stocks were also affected after Germany's fourth biggest bank, Hypo Real Estate, had to be rescued afresh over the weekend - news that helped push the euro to a 13-month low against the dollar. France's BNP Paribas, meanwhile, announced Sunday that it was taking control of the operations of ailing financial group Fortis in Belgium and Luxembourg.
Markets were looking ahead to a meeting Friday of finance chiefs from the Group of Seven rich nations, waiting for any announcements on coordinated action such as liquidity injections or interest rate cuts, dealers said. A speech Tuesday by US Federal Reserve Chairman Ben Bernanke would also be closely watched for any clues on the possibility of a US interest rate cut, they said.
