Almost £50bn was wiped off the value of britain's 100 biggest companies on a day of global stock market mayhem triggered by a deepening of the eurozone crisis and fears for the US economy. After a day of massive stock market falls in Europe and the US of a kind not seen since the depths of the last economic downturn, traders said the atmospherewas reminiscent of the banking crisis of October 2008. Wall Street endured one of its worst days since the height of that crisis, with the Dow Jones Industrial Index closing more than 500 points or 4.3% lower at 11,383 in heavy volume, as it resumed a two-week streak interrupted only briefly on Wednesday. It was the biggest single-day loss since 2008. "For many traders this week has felt like the start of the banking crisis in 2008, which would go some way to explaining the panic selling we have seen today," said Will Hedden, sales trader at IG Index. The fall on Wall Street is expected to cause further falls in the FTSE 100 index of leading shares today, after the index fell to its lowest close, 5393.14, since September 2010 yesterday. The futures market was predicting a further 100 point fall. Rumours were swirling around the City that hedge funds were being forced to sell assets such as gold in order to cover deepening losses on other investments. This led to a surprise 1% drop in gold, which in recent weeks had hit record highs of more than £1,000 an ounce as a safe haven bet in the eurozone and US debt crisis. Brent crude fell 5% to $107 a barrel amid signs of slowdown in the west's economies. Anxiety over the debt crisis in the eurozone, and increasingly in Italy, set the tone for nervous trading during the London morning, but the pace of the decline accelerated as Wall Street opened sharply lower. By early afternoon in New York the Dow Jones had declined by 400 points, resuming the two-week losing streak only briefly interrupted on Wednesday. Despite this week's 11th-hour agreement to raise the US debt ceiling, Wall Street is increasingly anxious over the health of the world's biggest economy. A major test comes today with the release of US employment data giving the latest health check of an economy which barely grew in the first half of the year.
Access Investments-Building Awareness - European Union-ROMANIA
Friday, August 5, 2011
Almost £50bn was wiped off the value of britain's 100 biggest companies on a day of global stock market mayhem triggered by a deepening of the eurozone crisis and fears for the US economy. After a day of massive stock market falls in Europe and the US of a kind not seen since the depths of the last economic downturn, traders said the atmospherewas reminiscent of the banking crisis of October 2008. Wall Street endured one of its worst days since the height of that crisis, with the Dow Jones Industrial Index closing more than 500 points or 4.3% lower at 11,383 in heavy volume, as it resumed a two-week streak interrupted only briefly on Wednesday. It was the biggest single-day loss since 2008. "For many traders this week has felt like the start of the banking crisis in 2008, which would go some way to explaining the panic selling we have seen today," said Will Hedden, sales trader at IG Index. The fall on Wall Street is expected to cause further falls in the FTSE 100 index of leading shares today, after the index fell to its lowest close, 5393.14, since September 2010 yesterday. The futures market was predicting a further 100 point fall. Rumours were swirling around the City that hedge funds were being forced to sell assets such as gold in order to cover deepening losses on other investments. This led to a surprise 1% drop in gold, which in recent weeks had hit record highs of more than £1,000 an ounce as a safe haven bet in the eurozone and US debt crisis. Brent crude fell 5% to $107 a barrel amid signs of slowdown in the west's economies. Anxiety over the debt crisis in the eurozone, and increasingly in Italy, set the tone for nervous trading during the London morning, but the pace of the decline accelerated as Wall Street opened sharply lower. By early afternoon in New York the Dow Jones had declined by 400 points, resuming the two-week losing streak only briefly interrupted on Wednesday. Despite this week's 11th-hour agreement to raise the US debt ceiling, Wall Street is increasingly anxious over the health of the world's biggest economy. A major test comes today with the release of US employment data giving the latest health check of an economy which barely grew in the first half of the year.
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World stock markets tumbled sharply again on Thursday, wiping nearly £50bn off the value of Britain's biggest listed companies, as the eurozone crisis and fears over the global economy sparked another rout in the City.
The FTSE 100 index fell by 191.27 points to close at 5393.14, its lowest closing level since 2 September 2010. At 3.43%, this is the index's biggest daily fall in percentage terms since 30 March 2009, and the biggest points fall since 2 March 2009.
Other European markets also suffered heavy losses, with Germany's Dax closing 3.5% lower and the French CAC dropping by 4%.
The selloff took hold after the European commission president warned that the crisis in the eurozone was threatening to engulf Italy and Spain. Fears over the health of the global economy, and predictions that America could slide back into recession, also helped to drive the latest bout of heavy selling.
Shares were also in retreat on Wall Street, with the Dow Jones index down by 2.68% when trading ended in London.
The scenes were reminiscent of the worst days of the financial crisis, three years ago.
"For many traders this week has felt like the start of the banking crisis in 2008, which would go some way to explaining the panic selling we have seen today," said Will Hedden, sales trader at IG Index.
"European sovereign debt and faltering global economic recoveries are weighing on markets," Hedden added.
World stock markets tumbled sharply again on Thursday, wiping nearly £50bn off the value of Britain's biggest listed companies, as the eurozone crisis and fears over the global economy sparked another rout in the City.
The FTSE 100 index fell by 191.27 points to close at 5393.14, its lowest closing level since 2 September 2010. At 3.43%, this is the index's biggest daily fall in percentage terms since 30 March 2009, and the biggest points fall since 2 March 2009.
Other European markets also suffered heavy losses, with Germany's Dax closing 3.5% lower and the French CAC dropping by 4%.
The selloff took hold after the European commission president warned that the crisis in the eurozone was threatening to engulf Italy and Spain. Fears over the health of the global economy, and predictions that America could slide back into recession, also helped to drive the latest bout of heavy selling.
Shares were also in retreat on Wall Street, with the Dow Jones index down by 2.68% when trading ended in London.
The scenes were reminiscent of the worst days of the financial crisis, three years ago.
"For many traders this week has felt like the start of the banking crisis in 2008, which would go some way to explaining the panic selling we have seen today," said Will Hedden, sales trader at IG Index.
"European sovereign debt and faltering global economic recoveries are weighing on markets," Hedden added.
Oh dear. This was just a matter of time. The credit crisis has to my mind seemed a little unreal and this was in part due to the banks losses being bailed out by governments all over the western world. The problem of course was this was financed by sovereign [ie taxpayers] debt. Many banks still have dodgy debts [ eg Greece] especially in France and Germany.Italy has a massive public sector debt and sclerotic growth rates and like the periphery of Europe locked into an uncompetitive [ for them] Euro exchange rate. Future growth in these countries is likely to be low.
Moreover as the debt crisis spreads more debt must betaken on by the core countries [France Germany Netherlands as well as the Spain and Italy's of this world} - thus weakening their own balance sheets...creating more worry about sovereign risk.[eg I see Belgium is now in the frame]. Then you have the huge debt problem in America and poor growth prospects there. [America is also borrowing massively from China to finance imports/trade imbalance]. The west [ Europe and the US] badly needs economic growth - however growth needs domestic or export demand - since previous demand was financed by excessive borrowing - domestic demand is unlikely to rise much our as we are all [individuals , governments and banks etc still paying off debts]. Export demand would need to come from China/the emerging economies. This is also unlikely as China is keeping their currency low and sitting on a mountain of dollars [thus causing domestic inflation ] other countries such as Brazil have trade barriers anyway. If the Chinese currency were permitted to rise demand for western goods could increase - however don't hold your breath.I am afraid the crisis will roll on ...until all the risky debt positions have unwound and debt/Euro restructuring in Europe has taken place. The politicians however are't keen [ don't want THEIR banks further exposed] so we will stagger on with markets dictating the pace. Make no mistake we are in 30's style slump. Labour's suggestion of MORE borrowing is completely ludicrous given that DEBT is the problem. In the long run some losses will be sustained and WE ARE ALL GOING TO HAVE TO SAVE MORE [and borrow less] - lower growth will be the inevitable result in the west at least.
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