World markets continue to slide
Pastor Dale Morgan
World markets continue to slide*
* Story Highlights
* European, Asian markets dip again Wednesday on credit crunch fears
* Problems in U.S. subprime loan sector originally fueled the concerns
* Worries about a slowdown in the U.S. economy have grown
* This comes from faltering profit forecasts by major retailers Tuesday
LONDON, England (AP) -- Global markets dipped Wednesday on persistent
jitters over the credit crunch started by problems in the U.S. subprime
loan sector, and now broader concern about the nation's economy.
Hong Kong's Hang Seng Index fell 2.9 percent on Wednesday.
The UK's FTSE-100 slid 0.6 percent to 6,106.50. France's CAC-40 declined
0.6 percent to 5,444.12 and Germany's DAX lost 0.5 percent to 7,386.2.
Asia, Tokyo and New Zealand benchmarks closed at nine-month lows.
"Market volatility is going to continue until the extent of the problem
is properly known," said Richard Hunter, head of equities at Hargreaves
Lansdown stockbrokers. "It may take a few weeks for positions to unwind
and for banks to hold their hands up and reveal how much they are
exposed to."
Stocks in the U.S. wobbled after the Dow Jones industrial average
briefly dipped below 13,000 as Wall Street kept a close eye on the
Federal Reserve and how much more cash it might inject into the banking
system. In midday trading, the Dow was down 8.05, or 0.06 percent, at
13,020.87. The Standard & Poor's 500 index was up 0.75, or 0.05 percent,
at 1,427.29, and the Nasdaq composite index was down 2.50, or 0.10
percent, at 2,496.62.
Japanese export issues also took a battering from the strong yen.
Worries about a slowdown in the U.S. economy have grown, fueled by
faltering profit forecasts by major retailers Tuesday including the
world's largest, Wal-Mart Stores Inc.
In Asia, some economists and dealers said the stock market gyrations
were short-term. Some issues could even be good bargains, they said,
given the strong growth and earnings data from China, Japan and other
regional economies.
In Brazil, the main index for the Bovespa exchange was down 1.7 percent
to 50,062 in afternoon trading. Brazil's currency, the real, traded
above the psychologically important 2-to-the-dollar level for the first
time in months in intraday trading and then slipped just below that mark
but was still off sharply against the dollar.
There was no sign Wednesday that the European Central Bank would inject
even more money into the markets to alleviate nervous banks as a weekly
tender of 292.5 billion euros ($397.54 billion) and a one-day loan of
7.7 billion euros ($10.47 billion) came due.
Tuesday's one-day offer from the ECB -- much smaller than cash infusions
during the previous three trading days -- brought the total amount lent
since Thursday to 211 billion euros ($286.77 billion).
Major central banks around the world have provided extra funds, but on a
smaller scale, and central banks in Japan and Australia have even begun
draining funds from the money market.
The Nikkei 225 stock index, the benchmark for Asia's biggest stock
market, plummeted 2.2 percent to 16,475.61, its lowest since December 8,
as financial issues were rattled by fallout from the U.S. subprime
mortgage crisis.
Weak American spending would be a blow to the Japanese and other Asian
economies, which are heavily dependent on exports to the U.S.
The Dow Jones industrial average shed 1.6 percent to 13,028.92 on
Tuesday, on the verge of falling below the psychologically important
13,000 mark, which it first crossed in late April.
"It's not a particularly pretty day for the market. World markets are
all just following each other at the moment and they're quite skittish,"
said UBS equities director Paul Nicolson in New Zealand, where the
benchmark NZX-50 index slipped below the psychological 4,000 barrier
before ending down 1.5 percent at 4,004.46 -- its lowest closing since
December 2006.
Hong Kong's Hang Seng Index fell 2.9 percent to 21,375.72, and
Singapore's Straits Times Index fell 3.4 percent to close at 3,273.25.
"We remain confident that things can calm down," said David Cohen,
director of Asian forecasting at Action Economics in Singapore. "There
is enough momentum in the global economy it should ultimately sustain
the solid growth in world GDP through the middle of the year."
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In the short term, though, Cohen warned more bad news could be expected
about troubled hedge funds, which could set off another drop in regional
stocks.
"It's going to be on a roller coaster for a little while. Clearly
investors are nervous," he said.