Sydney: World markets plunged Monday on fresh fears over the state of the global financial system as Wall Street giant Lehman Brothers said it would file for bankruptcy.
After sharp falls in Asia, the picture was the same across Europe as London’s FTSE 100 shed 2.28% on opening, Frankfurt’s DAX fell 1.55% and Paris’s CAC lost 2.48%.
Taiwan stocks ended down 4.09% and Philippine shares were off 4.2%, while Australian dealers fought back slightly from earlier losses to end the day off 1.8%.
In Singapore the main Straits Times Index had fallen 2.26% in morning trading.
Indian shares tumbled 5.19% within minutes of opening, while Singapore stocks dropped 2.26% in the morning.
Several major markets in the region, including Tokyo, Hong Kong, Shanghai and Seoul were closed for public holidays.
In the markets that were trading, financial sectors suffered most as investment bank Lehman Brothers, hard-hit by the US subprime real estate meltdown, staged a last-ditch effort to find a buyer.
When it failed, the Wall Street titan announced that it intended to file for bankruptcy “in order to protect its assets and maximise value.”
The Federal Reserve and major global banks opened up fresh credit as markets braced for its collapse, with many fearing a domino effect that would ravage the rest of the global financial system.
Australia’s benchmark S&P/ASX200 dropped 86.1 points to 4,817.7, while the broader All Ordinaries dropped 82.1 points to end the day at 4,875.
“Obviously, with Lehman looking to file for bankruptcy protection, Bank of America buying Merrill Lynch and AIG under pressure to sell assets, you’ve probably seen more in one day of financial history than we’ve seen since the great crash of 1929,” Macquarie Private Wealth associate director Marcus Droga told Dow Jones Newswires.
“I’m not suggesting the US market will crash tonight, but in terms of landmark events, it’s an historic day,” said Droga.
“It is all being driven by the financial sector, mainly on the back of the news from the US,” CMC Markets senior dealer Dominic Vaughan said.
“(The banks) are the key driver,” said Austock Securities senior client adviser Michael Heffernan. “Other than that our resources stocks are doing all right, but the banks are getting belted at the moment.”
In Taiwan, the weighted index fell 258.23 points to 6,052.45.
“Fears of a systematic financial crisis from Lehman Brothers’ difficulties prompted investors to dump their holdings,” Concord Securities analyst Allen Lin aid.
In the Philippines, the composite index fell 109.96 points to 2,536.16, its lowest level in six weeks, while the all-shares index fell 0.55% to 1,647.34 points.
“The Lehman Brothers story is an indication that the worst in the US financial sector is not yet over,” First Grade Holdings Managing Director Astro Del Castillo said.
In Mumbai, the BSE benchmark 30 share Sensex index slumped 727.95 points to 13,272.86 in early morning trade.
“Reports of weakening US financial markets and the possibility of worse to follow (for some global banks) has clearly spooked investors,” said Apurva Shah, head of research with brokerage Prabhudas Lilladher.