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Shares fall as recession fears take grip
(Agencies)
Updated: 2008-10-17 00:18 LONDON - Shares across the world fell for the second straight day on Thursday, pummeled by signs the world's biggest economies were headed for recession after a month of financial sector turmoil.
European stocks fell 3 percent by midday after Wall Street and Japan's Nikkei both suffered their worst one-day losses since the stock market crash of 1987, and the MSCI World stock index traded 3 percent lower. US stock index futures were up 1 percent higher, suggesting a pause in the hemorrhaging even as Citigroup and Merrill Lynch posted big third quarter losses. Oil fell $1.70 a barrel, trading at less than half the record high of $147 a barrel it hit in July, as fears of a sharp fall in demand took grip, and the dollar gained as risk-weary investors sold higher yielding currencies, unwinding carry trades. Sharp equity gains on the first two days of the week were quickly forgotten after dismal US retail sales and the Beige Book report underlined concerns about the economy. Federal Reserve Chairman Ben Bernanke said it faced a "significant threat" from credit markets. "The whole cliche of Wall Street arriving on Main Street is so true now, with recession in the US, the UK, Europe and probably Japan, and significant slowing elsewhere," said Bernard McAlinden, strategist at NCB Stockbrokers in Dublin. Handset maker and technology bellwether Nokia, eyed for clues as to how a global financial crisis has hit consumer spending, posted results that were below analyst expectations. But its outlook soothed worried investors. Bank bailouts by governments across the world and a concerted rate cut last week have helped started to unfreeze money markets, and Switzerland moved on Thursday to provide its two top banks -- Credit Suisse and UBS -- with billions of francs in emergency funding. But any optimism about the stabilization in money markets has been swept aside, and reports are trickling in about sharp losses at hedge funds. "I think today there is just a combination of uncertainty and deleveraging in the market," said Amar Gill, head of thematic research at CLSA in Singapore. "International funds are pulling back and putting their money into whatever is safest: Treasuries or cash or paying off existing debt," he said. Citadel Investment Group, one of the world's largest hedge funds, said September was the single worst month in the history of the company and warned of more volatility in weeks to come. |
