It’s sell, sell, sell as investors gripped by fear amid scepticism that crisis under control
Global government efforts to thaw frozen markets fails to translate into confidence
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A massive selloff on Wall Street and escalating fears of a global recession sent world markets plunging yesterday.
Japan’s key index shed nearly 10% to end its worst week in history.
Despite recent moves by the world’s central banks to thaw frozen credit markets and boost investor confidence, their efforts fell flat as markets hurtled toward a global equity crisis.
“Selling is unstoppable in New York and Tokyo,” said senior Japanese financial strategist Yutaka Miura.
“Investors were gripped by fear.”
Finance ministers and central bankers from the G7 industrialised nations were meeting in Washington, but analysts in Asia said they were sceptical that the gathering would produce solutions to contain the global financial contagion.
Eurozone countries will hold an urgent summit meeting tomorrow to discuss ways to respond to the worldwide financial crisis, French officials said last night.
French President Nicolas Sarkozy’s office said national leaders are to join European Union Commission President Jose Manuel Barroso and European Central Bank (ECB) chief Jean-Claude Trichet for the meeting in Paris.
In Australia, where the S&P/ASX200 plummeted a record 8.3%, market watchers were calling it Black Friday.
Key indices in Hong Kong, India and Singapore were all down about 7%-8%. Mainland China’s Shanghai Composite Index posted a more moderate decline of 3.6%.
As Europe opened, major markets also plunged. The UK’s FTSE 100 index slid about more than 5%, while Germany’s DAX was down 7%.
In Tokyo, the turmoil left individual investors shell-shocked. Over the last week, the Nikkei has lost nearly a quarter of its value.
In a bid to boost liquidity, India’s central bank cut the cash reserve ratio by 1% to 7.5%.
Regulators in Russia ordered Moscow’s MICEX not to open for regular trading at the usual time, and the opening of the RTS was also postponed until further notice, the state-run RIA-Novosti news agency said.
Japan’s benchmark Nikkei 225 index tumbled 881.06 points, or 9.6%, to 8,276.43, its lowest closing level since May 2003.
The regional selloff followed a 7.3% plunge in the Dow Jones industrial average on Thursday to close below the 9,000-line for the first time in five years. The Dow’s seven-day decline of 20.9% was the largest since the plunge ending October 26, 1987, when the Dow lost 23.8%. That selloff included Black Monday, the October 19, 1987 market crash that saw the Dow fall nearly 23% in a day.
Later, Wall Street ended a wild session with its best showing of the week after investors went in search of bargains among stocks devastated by significant losses in recent days.
The Dow Jones lost 126 points, a relatively mild drop after the blue chips fell 2,271 during the previous eight trading days, while the Nasdaq composite index finished with a modest gain.
It was still the worst week ever for the Dow, which traded in a range of 1,019 points yesterday.
“There’s no bottom to the stock markets now,” said Francis Lun, general manager at Fulbright Securities in Hong Kong.
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