Stock markets around the world tumbled yesterday after falling oil prices and further downbeat corporate news in the US rekindled fears about a global slide into recession.
Stock markets around the world tumbled yesterday after falling oil prices and further downbeat corporate news in the US rekindled fears about a global slide into recession.
The Dow Jones Industrial Average's bigger-than-anticipated decline in early trading - largely on the back of warnings by coffee chain Starbucks and others that grim times lay ahead - pushed European indices even lower than they already were.
UK investors wiped out all the gains from the previous session and obliterated almost £44bn from the value of the FTSE-100 index, which ended the session down 157.23 points, or 3.6%, at 4246.69.
At the same time, Germany's DAX fell 5.3% to 4761.58 and France's CAC-40 lost 4.8% at 3336.41, as hopes faded that China's economic stimulus package would be enough to stem a global recession.
The $586bn stimulus plan announced by the Chinese government over the weekend had led stocks higher in Asia and Europe on Monday, but reality set in yesterday morning.
Meanwhile, record quarterly losses posted by Fannie Mae and insurer AIG weighed on financial equities and sliced into European markets.
The biggest drama of the day was in Moscow, where shares prices on the MICEX plummeted 12.6% five minutes before the official close of trading, when regulators ordered the exchange to shut down.
The Russian drama was largely instigated by the price of oil, which tumbled $3.16 to $59.25 a barrel in electronic trading on the New York Mercantile Exchange.
Oil prices have fallen about 60% since reaching a record $147.27 a barrel in mid-July, refocusing attention on the prospect of widespread recession, Meanwhile, the Dow ended the day down 176.58 points, or 1.99%, at 8693.96.
Frances Hudson, global strategist at Edinburgh-based Standard Life Investments, believes the bottom may be in sight.
She said: "Markets have certainly moved their focus from financials to general fear of a prolonged economic recession. However, we are noticing that the market is factoring in and shrugging off a lot of poor company results, and that's a sign of capitulation.
"Our view is that we are definitely facing recession, but not a depression."
Earlier, Tokyo's Nikkei 225 index dropped 3%, while the Hang Seng benchmark in Hong Kong lost 4.8%. Elsewhere in Asia, China's Shanghai Composite index fell 1.7%, Australia's index tumbled 3.6% and India's Sensex fell 5%. Markets in Singapore, Taiwan and South Korea were also hit by heavy selling.
