×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Economy fears hammer investors again

Economy fears hammer investors again
Comment E-mail Print Share
First Published: Wed, Nov 12 2008. 09 01 AM IST
Updated: Wed, Nov 12 2008. 09 01 AM IST
New York: Economic gloom overpowered financial markets again on Tuesday, sending world stock and commodity prices lower as the enthusiasm resulting from China’s $600 billion stimulus plan announced late on Sunday fizzled out.
Further evidence of a slowing Chinese economy, the world’s fourth largest, came with data showing China’s import growth slowed in October as domestic demand cooled.
This followed Friday’s dismal US jobs report and both reports overshadowed China’s plan to spend nearly $600 billion to stimulate its economy with new government spending between now and 2010, leaving investors to brace for a long spate of weak data.
The gloom pushed US stocks down and sent oil, which is heavily dependent on global growth, to a 20-month low of $58.32 a barrel. Gold also took a hit while the US dollar was broadly firmer.
The Dow Jones Industrial Average ended down 180.96 points or 2.04% at 8,689.58. The benchmark S&P500 stock index fell 20.71 points or 2.25% to 898.50, while the Nasdaq ended down 35.98 points or 2.23% at 1,580.76.
Bad news
Bad news from corporate America - General Motors shares currently at a 65-year low, Goldman Sachs seen posting a first-ever quarterly loss, and the second largest US electronics retailer Circuit City’s bankruptcy filing on Monday - overwhelmed any optimism.
Adding to the grim tone, Merrill Lynch & Co Chief Executive John Thain said the global economy is in a deep slowdown and will not recover quickly, and the environment recalls 1929, the advent of the Great Depression.
Blaming faltering global demand, Alcoa cut aluminum-making capacity worldwide. The company, a Dow component, saw its shares slide.
The diminishing appetite for risky assets, such as stocks, roiled markets across Asia overnight and pushed European shares down.
The pan-European FTSEurofirst 300 stock index closed down 4.22%. Japan’s Nikkei average ended down 3.0%.
The German government’s panel of economic advisers will forecast on Wednesday that the country will be “in recession” next year, a source familiar with the data told Reuters on Tuesday.
The US government bond market was closed for Veterans Day, depriving investors of a traditional safe haven during times of trouble in financial markets.
Investors’ fear of risky assets benefited the US dollar, which edged higher against a basket of currencies.
The US Dollar Index was up 1.38% at 87.16 from a previous session close of 85.971. The euro was down 1.62% at $1.2525 from a previous session close of $1.2731.
The Japanese yen also rose against most currencies as worries over slowing growth kept up the pressure to reverse carry trade positions, where low-yielding currencies like the Japanese currency are used to buy assets in higher-yielding ones.
Against the Japanese yen, the US dollar was down 0.27% at 97.73 from a previous session close of 97.990.
Comment E-mail Print Share
First Published: Wed, Nov 12 2008. 09 01 AM IST
More Topics: Market Crisis | Global | US | Economy | Dow Jones |