Markets Down Across the World; Dow Jones Falls Below 9,000

October 9th, 2008

Stock markets across the world have fallen dramatically once more as worries that recent government moves might not prevent a global recession.

The largest drop was with the the Dow Jones(DJIA), which fell 678 points, or more then 7.3%, to below 9,000 to close at 8,579.19. The index has fallen over 2,000 points in the past nine days to reach its lowest level since 2003. The S&P 500 was down more than 7%.

The U.S. markets opened on the positive side, but with bad news coming from several different areas such as whether or not the 700 billion USD bank bailout bill passed by the United States House of Representatives and the Senate is working or will work. Concerns over the lack of trading within the credit market is one of the main reasons for the drop.
This is the seventh straight day of markets closing in severely negative numbers.

One of the biggest stocks that dropped wasGeneral Motors, which lost more then 33% of its value.

In the UK, the FTSE 100 dropped from a day high of 145 points to 52.9 points lower, which is a 4 year low. The biggest drop was Barclays, which dropped 13.1%.

The only major world indexes that gained any value were the Hang Seng in Hong Kong, which closed up 511.51 points or up 3.31%, and the Russian RTS, which ended up more than 10.91%, recovering partly yesterday’s fall.
“Markets are still sceptic with regards to the international coordination to face the problems of the financial system,” explained Barclays Capital economists. Thus, they predicted, stocks will continue to be volatile for longer.

Investors are waiting for the outcome of several meetings that will be held this weekend. Finance ministers from the G7 will be gathering in Washington, and in the meantime the International Monetary Fund and the World Bank will be holding there autumn meetings.

In response to the financial tsunami, the European Central Bank (ECB) opened this Thursday an unlimited emergency credit line to stimulate liquidity in the institutions that are facing bankruptcy. Through six-day credits, the ECB plans aiding financially the 15 countries which are part of the Eurozone. Furthermore, it injected $100 billion dollars to the market, duplicating the figure it had originally offered.

Iceland had to nationalize Kaupthing Bank, the most important one in the country. The Nordic state – whose economy is highly dependent on the banking system – is handling great financial problems after the government was forced to nationalize the three most important banks, and could have to face bankruptcy.

Central banks in Argentina, Brazil and Mexico also decided to intervene in the market to stop the rapid devaluation of their currencies, fearing a capital flight out.

Also, Germany’s Chancellor Angela Merkel did not rule out nationalizing banks.

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