Shares slide on fears of global slowdown
Shares slide on fears of global slowdown
By Neil Dennis
Copyright The Financial Times Limited 2007
Published: February 27 2007 09:24 | Last updated: February 27 2007 16:43
Global stocks slumped on Tuesday, with US and European markets driven sharply lower after Chinese equities plunged from record levels on fears of overvaluation, slowing growth and tensions over Iran.
Wall Street suffered sharp losses, hampered also by signs of slowing growth in economic activity as durable goods orders fell 7.8 per cent in January.
By midday in New York, the Dow Jones Industrial Average was down 1.2 per cent at 12,479.25, the S&P 500 shed 1.2 per cent to 1,432.26 and the Nasdaq Composite slid 1.8 per cent to 2,459.25.
European indices endured their biggest single-session declines since last May, when high valuations and fears that inflation growth would spark rapid interest rate increases drove the markets into a two-month period of volatile trading conditions.
The FTSE Eurofirst 300 ended the session down 2.8 per cent to 1,507.06, Frankfurt’s Xetra Dax shed 2.9 per cent to 6,823.63 and the CAC 40 in Paris slid 3 per cent to 5,588.43.
In London, the FTSE 100 was lower by 139 points, or 2.2 per cent, at 6,295.9 by the close, with all but one stock trading in negative territory. The heavyweight commodity stocks that have dictated the market’s direction were hit by concerns over a potential ‘windfall’ tax in South Africa.
China’s Shanghai Composite index tumbled nearly 9 per cent to 2,771.79, its biggest single-session fall in 10 years. The benchmark Chinese mainland index had hit a record high in the previous session.
Financial stocks led the decline, and the leading component Industrial & Commercial Bank of China, fell 8 per cent to Rmb4.69, while Bank of China lost 7.2 per cent to Rmb4.62.
As in Asia, it was financial stocks that took the biggest hit in continental Europe – particularly those geared to emerging markets – as investors removed cash from exposure to risk. Raiffeisen International, the Austrian bank with assets in Russia, Ukraine and other eastern European markets, fell 8.7 per cent to €102.54. National Bank of Greece, which owns assets in Turkey, fell 6.3 per cent to €39.28.
Fears of overvaluation have come amid a series of record highs for several Asian equity markets, including China and South Korea, and six-year peaks for Europe’s benchmarks.
Meanwhile, concerns about possible action on Iran, Opec’s number-two oil producer, intensified as a UN conference began in London to discuss possible sanctions.
Adding to the downbeat sentiment, former Federal Reserve chairman Alan Greenspan said on Monday that it was “possible” the US economy may fall into recession later this year.
Eurozone bond futures hit a seven-week high, echoing gains for US Treasuries overnight as the gloom in the equity market and increased geopolitical risk drove investors towards safety.
Rising aversion to other risky strategies, such as the carry trade – where investors sell low-yielding currencies to invest in higher-yielding assets – helped fuel gains for both the Swiss franc and the Japanese yen.
The Swiss franc, which has traditionally been a safe-haven asset at times of heightened risk gained 0.7 per cent against the dollar to SFr1.2215. The yen gained 1.6 per cent to a two-month high of Y118.70 against the dollar, and by 1 per cent to Y157.30 against the euro.
By Neil Dennis
Copyright The Financial Times Limited 2007
Published: February 27 2007 09:24 | Last updated: February 27 2007 16:43
Global stocks slumped on Tuesday, with US and European markets driven sharply lower after Chinese equities plunged from record levels on fears of overvaluation, slowing growth and tensions over Iran.
Wall Street suffered sharp losses, hampered also by signs of slowing growth in economic activity as durable goods orders fell 7.8 per cent in January.
By midday in New York, the Dow Jones Industrial Average was down 1.2 per cent at 12,479.25, the S&P 500 shed 1.2 per cent to 1,432.26 and the Nasdaq Composite slid 1.8 per cent to 2,459.25.
European indices endured their biggest single-session declines since last May, when high valuations and fears that inflation growth would spark rapid interest rate increases drove the markets into a two-month period of volatile trading conditions.
The FTSE Eurofirst 300 ended the session down 2.8 per cent to 1,507.06, Frankfurt’s Xetra Dax shed 2.9 per cent to 6,823.63 and the CAC 40 in Paris slid 3 per cent to 5,588.43.
In London, the FTSE 100 was lower by 139 points, or 2.2 per cent, at 6,295.9 by the close, with all but one stock trading in negative territory. The heavyweight commodity stocks that have dictated the market’s direction were hit by concerns over a potential ‘windfall’ tax in South Africa.
China’s Shanghai Composite index tumbled nearly 9 per cent to 2,771.79, its biggest single-session fall in 10 years. The benchmark Chinese mainland index had hit a record high in the previous session.
Financial stocks led the decline, and the leading component Industrial & Commercial Bank of China, fell 8 per cent to Rmb4.69, while Bank of China lost 7.2 per cent to Rmb4.62.
As in Asia, it was financial stocks that took the biggest hit in continental Europe – particularly those geared to emerging markets – as investors removed cash from exposure to risk. Raiffeisen International, the Austrian bank with assets in Russia, Ukraine and other eastern European markets, fell 8.7 per cent to €102.54. National Bank of Greece, which owns assets in Turkey, fell 6.3 per cent to €39.28.
Fears of overvaluation have come amid a series of record highs for several Asian equity markets, including China and South Korea, and six-year peaks for Europe’s benchmarks.
Meanwhile, concerns about possible action on Iran, Opec’s number-two oil producer, intensified as a UN conference began in London to discuss possible sanctions.
Adding to the downbeat sentiment, former Federal Reserve chairman Alan Greenspan said on Monday that it was “possible” the US economy may fall into recession later this year.
Eurozone bond futures hit a seven-week high, echoing gains for US Treasuries overnight as the gloom in the equity market and increased geopolitical risk drove investors towards safety.
Rising aversion to other risky strategies, such as the carry trade – where investors sell low-yielding currencies to invest in higher-yielding assets – helped fuel gains for both the Swiss franc and the Japanese yen.
The Swiss franc, which has traditionally been a safe-haven asset at times of heightened risk gained 0.7 per cent against the dollar to SFr1.2215. The yen gained 1.6 per cent to a two-month high of Y118.70 against the dollar, and by 1 per cent to Y157.30 against the euro.
posted by Carlos T Mock @ 9:21 AM
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