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Shares fall after bail-out fails Shares slide after bail-out fails
(9 minutes later)
European markets have fallen sharply after news the Senate has rejected the US carmaker bail-out package. World markets have fallen sharply after news the Senate has rejected the US carmaker bail-out package.
The FTSE 100 fell 3.6%, the Cac 40 dropped 5.1% and the Dax was down 4%, after Asian shares tumbled overnight.The FTSE 100 fell 3.6%, the Cac 40 dropped 5.1% and the Dax was down 4%, after Asian shares tumbled overnight.
The failure of the $14bn (£9.4bn) bail-out deal for the US car industry to get Senate support, raised fears of job cuts and a possible industry collapse.The failure of the $14bn (£9.4bn) bail-out deal for the US car industry to get Senate support, raised fears of job cuts and a possible industry collapse.
Shares on Wall Street are expected to to open lower, with worries about bank job cuts adding to the bailout woes.Shares on Wall Street are expected to to open lower, with worries about bank job cuts adding to the bailout woes.
Worried marketsWorried markets
"Today, the main thing is the uncertainty around the auto industry and whether or not it will go bust. This has markets worried," said Bernard McAlinden at NCB Stockbrokers."Today, the main thing is the uncertainty around the auto industry and whether or not it will go bust. This has markets worried," said Bernard McAlinden at NCB Stockbrokers.
If they do go under, the European and Asian carmakers lcould also be affected.If they do go under, the European and Asian carmakers lcould also be affected.
"If one of the big auto companies goes bust in the US, this could see a collapse in the entire supply chain. Groups like BMW, Honda and Nissan rely on this supply chain and they would suffer," said Heino Ruland at FrankfurtFinanz."If one of the big auto companies goes bust in the US, this could see a collapse in the entire supply chain. Groups like BMW, Honda and Nissan rely on this supply chain and they would suffer," said Heino Ruland at FrankfurtFinanz.
But it's not just the carmakers that have driven markets down.But it's not just the carmakers that have driven markets down.
News that Bank of America plans to cut 35,000 jobs has also pushed financial stocks lower across Europe.News that Bank of America plans to cut 35,000 jobs has also pushed financial stocks lower across Europe.
"The US economy like other developed economies is going to contract in 2009 and that makes the first half of 2009 quite problematic for equity markets," said Darren Winder, equity strategist at Casenove."The US economy like other developed economies is going to contract in 2009 and that makes the first half of 2009 quite problematic for equity markets," said Darren Winder, equity strategist at Casenove.
Stronger yenStronger yen
Japan's Nikkei share index fell 484.68 points, or 5.6%, to 8253.87, while Hong Kong's Hang Seng index sank 6.9%. Other regional markets also fell.Japan's Nikkei share index fell 484.68 points, or 5.6%, to 8253.87, while Hong Kong's Hang Seng index sank 6.9%. Other regional markets also fell.
Following the market falls. the Japanese government announced a 23 trillion yen (£170.8bn; $254.6bn) stimulus package.Following the market falls. the Japanese government announced a 23 trillion yen (£170.8bn; $254.6bn) stimulus package.
The package is designed to boost employment, encourage lending and inject capital into financial markets.The package is designed to boost employment, encourage lending and inject capital into financial markets.
Ten trillion yen will go on tax breaks and public financing while 13 trillion yen will be used to prop up financial markets.Ten trillion yen will go on tax breaks and public financing while 13 trillion yen will be used to prop up financial markets.
Shares in carmakers Toyota, Honda and Nissan all fell by at least 10%.Shares in carmakers Toyota, Honda and Nissan all fell by at least 10%.
Japanese exporters were also driven lower as the dollar sank to below 89 yen, a 13-year low.Japanese exporters were also driven lower as the dollar sank to below 89 yen, a 13-year low.