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Shares slide after bail-out fails Shares slide after bail-out fails
(about 2 hours later)
World stock markets have fallen following the rejection of the bail-out package for US carmakers by the Senate.World stock markets have fallen following the rejection of the bail-out package for US carmakers by the Senate.
On Wall Street the Dow Jones index shed 1.4% in early trading, while the FTSE 100 fell 2.7% and the Cac-40 lost 3%. The Dow Jones index shed 1.2% in morning trading, while the FTSE 100 closed 2.5% down. The Cac-40 lost 2.8%.
The failure of the $14bn (£9.4bn) bail-out deal for the US car industry to get Senate support has 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 has raised fears of job cuts and a possible industry collapse.
The White House says it is considering using money earmarked to rescue US banks to bail out the car industry.The White House says it is considering using money earmarked to rescue US banks to bail out the car industry.
Worried marketsWorried markets
If one of the big auto companies goes bust in the US, this could see a collapse in the entire supply chain Heino RulandFrankfurtFinanz White House considers auto rescueQ&A: Auto bail-out
"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, European and Asian carmakers could also be affected.If they do go under, European and Asian carmakers could 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 is not just the carmakers that have driven markets down.But it is 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.
Stimulus packageStimulus package
In Asian trade, Japan's Nikkei share index had fallen 484.68 points, or 5.6%, to 8253.87, while Hong Kong's Hang Seng index sank 6.9%. Other regional markets also fell. In Asian trade, Japan's Nikkei share index fell 5.6% 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.