Investors on edge after week of turmoil
Investors on edge after week of turmoil
By Christopher Brown-Humes and Paul J Davies in London and Richard Beales in New York
Copyright The Financial Times Limited 2007
Published: March 2 2007 18:30 | Last updated: March 3 2007 02:29
US stocks lost more ground on Friday after a turbulent week that saw European bourses endure their worst week for four years and Wall Street suffer its biggest one-day fall since markets reopened after the September 11 2001 terrorist attacks.
The global equity sell-off that began on Tuesday more than eradicated all this year’s gains, leaving investors on edge over the outlook for next week.
“Investors had become complacent about the outlook for the global economy, especially the US, and the prices of many risky assets had been bid to unsustainably high levels,” said Julian Jessop, of Capital Economics.
The flight from risky investments triggered a surge in volatility across financial markets. It began on Tuesday when Chinese stock markets fell 9 per cent amid concerns over the health of the US economy and the subprime mortgage market.
The worries about the US subprime mortgage market were underscored on Friday by the Federal Reserve and other US financial regulators who said they were worried that some borrowers did not understand the risks of such loans.
“It’s a classic risk sell-off after a very strong bull run,” said Robert Buckland, chief global equity strategist at Citigroup. “Whatever has gone up the most is going down the most.”
Wall Street, which suffered its steepest one-day fall in equities since 2001 on Tuesday, remained under pressure on Friday. The S&P 500 closed 1.1 per cent lower at 1,387.17, the second-worst day in a week in which the index lost 4.4 per cent. The Dow Jones Industrial Average was down 4.2 per cent on the week.
A flight to safety boosted global government bond prices, with 10-year US Treasury yields falling to 4.5 per cent from 4.67 per cent a week earlier.
The Nikkei 225 Average in Japan ended the week down 5.3 per cent and the Shanghai Composite index fell 5.6 per cent.
The yen climbed 3.5 per cent against the dollar as investors cut back “carry trade” positions, which involve borrowing in low-yielding currencies to buy higher yielding assets elsewhere.
In Europe, the FTSE Eurofirst 300 suffered its biggest weekly fall since March 2003, dropping 5.2 per cent. In London, the FTSE 100 fell 4.5 per cent to 6,116.2 – also its worst week since March 2003.
By Christopher Brown-Humes and Paul J Davies in London and Richard Beales in New York
Copyright The Financial Times Limited 2007
Published: March 2 2007 18:30 | Last updated: March 3 2007 02:29
US stocks lost more ground on Friday after a turbulent week that saw European bourses endure their worst week for four years and Wall Street suffer its biggest one-day fall since markets reopened after the September 11 2001 terrorist attacks.
The global equity sell-off that began on Tuesday more than eradicated all this year’s gains, leaving investors on edge over the outlook for next week.
“Investors had become complacent about the outlook for the global economy, especially the US, and the prices of many risky assets had been bid to unsustainably high levels,” said Julian Jessop, of Capital Economics.
The flight from risky investments triggered a surge in volatility across financial markets. It began on Tuesday when Chinese stock markets fell 9 per cent amid concerns over the health of the US economy and the subprime mortgage market.
The worries about the US subprime mortgage market were underscored on Friday by the Federal Reserve and other US financial regulators who said they were worried that some borrowers did not understand the risks of such loans.
“It’s a classic risk sell-off after a very strong bull run,” said Robert Buckland, chief global equity strategist at Citigroup. “Whatever has gone up the most is going down the most.”
Wall Street, which suffered its steepest one-day fall in equities since 2001 on Tuesday, remained under pressure on Friday. The S&P 500 closed 1.1 per cent lower at 1,387.17, the second-worst day in a week in which the index lost 4.4 per cent. The Dow Jones Industrial Average was down 4.2 per cent on the week.
A flight to safety boosted global government bond prices, with 10-year US Treasury yields falling to 4.5 per cent from 4.67 per cent a week earlier.
The Nikkei 225 Average in Japan ended the week down 5.3 per cent and the Shanghai Composite index fell 5.6 per cent.
The yen climbed 3.5 per cent against the dollar as investors cut back “carry trade” positions, which involve borrowing in low-yielding currencies to buy higher yielding assets elsewhere.
In Europe, the FTSE Eurofirst 300 suffered its biggest weekly fall since March 2003, dropping 5.2 per cent. In London, the FTSE 100 fell 4.5 per cent to 6,116.2 – also its worst week since March 2003.
posted by Carlos T Mock @ 8:39 AM
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