Business | Markets
Gloom deepens in world markets
Poor US corporate news and fears of General Motors collapse send stocks crashing around globe.
- Agencies
- Published: 00:01 November 12, 2008
- Floor limits bring Karachi trade to halt
- India shares drop 6.6% on global recession fears
- Oil, metals pull back as recession fears haunt
- UAE marts continue freefall
- Europe's markets dip following Asia over worrying US corporate news
- Pakistan, Sri Lanka and Vietnam most at risk
- UAE 'faces slower real estate growth'
- Experts urged to find solutions
London: World stock markets slid on Tuesday on fresh signs that corporate America was buckling under the strain of the worst financial crisis in decades, traders said.
US stocks skidded in early trade, with sentiment unsettled by fears about a collapse of General Motors (GM) and more poor corporate news from homebuilder Toll Brothers and coffee chain Starbucks amid the credit crisis.
The Dow Jones industrial average fell 236.72 points, or 2.67 per cent, to 8,633.82. The Standard & Poor's 500 Index gave up 25.94 points, or 2.82 per cent, at 893.27. The Nasdaq Composite Index lost 40.14 points, or 2.48 per cent, to 1,576.60.
"Discussions about the fate of General Motors and the US auto industry are driving the negative bias, yet a growing sense that the bailout request line is growing longer and more complicated to prioritise is taking a toll on investor confidence," said Patrick O'Hare, analyst at Briefing.com.
In late morning trade, London dropped 2.25 per cent, Frankfurt shed 2.57 per cent and Paris gave up 2.26 per cent after Asian stock markets closed sharply lower in the wake of losses on Wall Street on Monday.
"The corporate news is getting steadily worse and in some sectors is actually accelerating to the downside," said Simon Denham, managing director at Capital Spreads in London.
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In Asia, Indian shares plunged 6.6 per cent, Tokyo ended down 3.0 per cent, Hong Kong slumped 4.8 per cent, Seoul lost 2.1 per cent and Sydney dropped 3.6 per cent.
"The Chinese stimulus package failed to soothe worries about a global recession," NAB Capital economist David de Garis said. "While we've had some positive news, there is still plenty to worry about."
Chinese state press reported that more than 1,300 companies had shut down, suspended operations or moved out of south China's Pearl River Delta in the first nine months of the year due to the global downturn.
"We are certainly facing global financial turbulences that are intense and that have intensified," said Jean-Claude Trichet, head of the European Central Bank.
In the currency markets, the dollar edged higher against a basket of currencies, as concerns over a deteriorating global economy and a weaker tone in equities prompted investors to shun riskier assets. The yen also rose against most currencies as worries over slowing growth kept up the pressure to reverse carry trade positions.
Elsewhere, sterling was battered as it fell to its lowest in 12 years on a trade-weighted basis and hit a record low against the euro on concerns that the UK economy will suffer even more than the euro zone economy.
In commodities, oil, precious and industrial metals pulled back as fears of widespread recession overwhelmed cautious optimism over China's $600 billion (Dh2.2 trillion) stimulus package.
US light, sweet crude for December delivery was down $2.06, or 3.3 per cent, to $60.35 a barrel by 1341 GMT, having dipped below $60. London ICE Brent crude fell $1.98, or 3.4 per cent, to $57.10.
Gold declined although prices are likely to consolidate in the short term, analysts said, with the market eyeing the outcome of this weekend's G20 summit in Washington.
Spot gold was at $733.50/$736.00, down from from $745.75 late in New York on Monday, when it rose as much as 3 per cent.
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