Further turbulence for global markets
- 00:02:16
- ITN
Further turbulence for global markets
Global stock markets are enduring another Black Monday with Wall Street and London hitting four-year lows. After a weekend of financial turmoil in Europe, the FTSE 100 index was 363.1 points lower at 4617.2 by 16.36pm. Across the pond, the Dow Jones Industrial Average broke through the psychological 10000 level and was 448.5 points down at 9876.9. US officials have called for a "forceful and co-ordinated" global response to the credit crisis as the Federal Reserve announced a series of steps to help it funnel massive amounts of liquidity to clogged credit markets, including boosting the sizes of cash auctions and offering banks interest on reserves. In a statement, the Fed said: "Together, these actions should encourage term lending across a range of financial markets in a manner that eases pressures and promotes the ability of firms and households to obtain credit." Investors have taken little comfort from last Friday's $700 billion (£398bn) bail-out amid concerns that a US recession is still possible. And oil prices plunged to an eight-month low below $90 a barrel amid fears over the impact of a deep recession on demand. In the UK, Chancellor Alistair Darling, flanked by Prime Minister Gordon Brown, told a hushed House of Commons that the Bank of England will inject a further £40 billion into the financial system on Tuesday. Senior trader at ETX Capital, Manoj Ladwa, said: "Just when the market thinks it has found a base level, there's another jolt to the system. Black Mondays used to be a once-a-decade event - now they're coming along more regularly than a London bus." Elsewhere, Iceland halted trading in its hard-hit banks and financial firms as the island's weakened currency slid further and the government scrambled to avert a fully-fledged market meltdown. Meanwhile, the European Central Bank (ECB), the Bank of England and the Swiss National Bank pumped more than $60 billion (£34bn) into markets to try to keep the financial sector flush with cash, and more European governments moved to bolster protection of bank accounts. And Germany's Dax was 5.1 per cent lower after the country's government was forced to provide state aid to leading institution Hypo Real Estate, with Paris' CAC 40 down 5.6 per cent. On Sunday, the Germany government announced it would guarantee all private bank accounts, joining Ireland, Denmark, Sweden and Greece in taking drastic independent action to ward off financial crisis. In Italy, UniCredit, the country's second-biggest bank, issued a profits warning after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost, while French bank BNP Paribas is bought a majority stake in struggling Belgian operation Fortis. Henk Potts, strategist at Barclays Stockbrokers, said: "It's a miserable state of affairs. And then you add to that the banking problems we've seen over the weekend. "There's the bail-out plan, which is good news, but there's uncertainty over the price at which assets are going to be bought. And the reality is that it will take some time to see the benefit." And Tom Hougaard, chief market strategist at City Index, said: "We have a seriously weak and fear-driven market at our hands. It is anyone's guess where we will end the day."
ITN | October 6, 2008
