| |
| |
![]() |
| |
|
| |
|
| |
|
LONDON - Stock markets plummeted Friday amid shock at mounting evidence that major economies are heading for recession, with London hit hard by shrinking British growth.
"Everyone is staring at their screens in disbelief," said Tom Hougaard, chief market strategist at City Index.
By midday, London stocks had plunged 7 per cent, touching their lowest in 5-1/2 years, Frankfurt crashed by 10.13 per cent and Paris plunged 8.47 per cent.
In Asia, Tokyo sank nearly 10 per cent and Hong Kong tumbled as concern grew that the chronic financial crisis was taking a heavy toll on company earnings.
Investors also took their lead from news that the British economy contracted 0.5 per cent in the three months to September in the first quarterly contraction since 1992.
In reaction, London's FTSE 100 index of leading shares sank as low as 3,715.24 points -- which was the lowest point since 2003.
IG Index analyst David Jones added: "It was no real surprise to markets that the UK economy shrunk in the third quarter -- but the concern now is that the slowdown could end up being much worse than expected."
Britain had already shown flat performance in the second quarter with zero growth. However, the economy is not officially in recession unless it reports two quarters running of negative economic growth, or contraction.
In Asian trade, Tokyo lost 9.60 per cent, ending below the key 8,000-point level for the first time in more than five years as the yen soared and after a profit warning from tech giant Sony. The Hong Kong market closed with a loss of
8.3 per cent.
In foreign exchange activity, the euro fell to a two-year low under 1.25 dollars and the British pound slumped to a five-year trough against the US unit as dealers bet on interest rate cuts to boost the flagging economies.
The yen surged to a 13-year high against the dollar and to a six-year peak against the euro as investors took shelter from the latest storm lashing global
financial markets.
"Traders looking for some kind of support have seen their hopes wiped away as the pound and euro plummet to depths not seen for many, many years," said Capital Spreads managing director Simon Denham.
In commodities, meanwhile, the price of crude oil fell sharply to 17-month lows on fears of lower demand, despite news that the OPEC cartel will cut oil output by 1.5 million barrels per day, traders said.
Brent North Sea crude for December delivery slumped to 61.08 dollars per barrel, which was the lowest point since March 2007.
South Korean shares dived Friday by 10.6 per cent -- a day after a 7.4 per cent plunge -- after the domestic economy grew at its slowest pace for four years and Samsung Electronics reported a sharp drop in quarterly profit.
Sydney ended with a loss of 2.6 per cent, while Indian shares fell almost 11 per cent to a near three-year low.
"The best word to describe what's going on right now is panic," said Credit Suisse strategist Satoru Ogasawara. "When you don't know what will come next, you tend to flee to the safest place."
The sell-off came as Asian leaders meeting in Beijing agreed to set up an 80-billion-dollar fund to fight the global economic crisis.
The deal between South Korea, China, Japan and the 10 members of the Association of Southeast Asian Nations is the first major coordinated regional action since the full force of the financial turmoil erupted last month.
In Australia, three big investment firms said they had frozen at least 3.66 billion US dollars' worth of investors' funds to stem an exodus sparked by a government deposit guarantee.
The rout supported the yen, particularly against higher-yielding currencies such as the euro, the Australian dollar and the British pound.
The stronger Japanese currency is bad news for exporters such as Sony, which warned it now expects its annual profits to drop by more than half.
Governments around the world have pumped cash into the banking system in recent weeks to try to contain what former Federal Reserve chairman Alan Greenspan described Thursday as a "once-in-a-century credit tsunami".
While there have been some tentative signs of an easing of the credit crunch, concerns are growing about the worsening outlook for economic growth and corporate earnings.
- AFP/ir
|
