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Global stocks in volatile trading | |
(30 minutes later) | |
European shares have seen mixed trading on Wednesday as US housing and credit woes continue to cast a shadow over global stock markets. | |
After initially falling 43 points, the UK's FTSE 100 index was up 16 points at 6,118 by late morning. Germany's Dax was down 19 points at 7,412. | |
The latest share turbulence was caused by Merrill Lynch warning that the credit squeeze will hurt bank profits. | |
Investor confidence was also hit by weak US consumer sentiment figures. | Investor confidence was also hit by weak US consumer sentiment figures. |
The Dax was also hit by a fall in German consumer confidence in July, blamed on the turmoil in the markets. | The Dax was also hit by a fall in German consumer confidence in July, blamed on the turmoil in the markets. |
Earlier, Japan's main Nikkei index had closed down 275 points, or 1.7%, at 16,013. | |
On Tuesday, the US Dow Jones index lost 280 points, or 2.1%, to close at 13,042. | |
Stock downgrades | Stock downgrades |
The latest warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - was given by brokers at investment bank Merrill Lynch. | The latest warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - was given by brokers at investment bank Merrill Lynch. |
It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems Analyst Shoji Yoshikoshi Market jitters and your wallet | It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems Analyst Shoji Yoshikoshi Market jitters and your wallet |
They downgraded their opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup. | They downgraded their opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup. |
The mood of global investors has been further hit by released minutes of the most recent meeting of the Federal Reserve, which suggested a US interest rate cut might not be imminent. | The mood of global investors has been further hit by released minutes of the most recent meeting of the Federal Reserve, which suggested a US interest rate cut might not be imminent. |
The minutes showed that while the committee's members realised that the problems in the financial markets might need a policy response, they did not act at the start of this month because they were keeping their focus on inflation. | The minutes showed that while the committee's members realised that the problems in the financial markets might need a policy response, they did not act at the start of this month because they were keeping their focus on inflation. |
"Everyone is scared," said Shoji Yoshikoshi, senior investment strategist at Mitsubishi Capital UFJ Securities. | "Everyone is scared," said Shoji Yoshikoshi, senior investment strategist at Mitsubishi Capital UFJ Securities. |
"It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems." | "It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems." |
The sub-prime mortgage sector gives higher risk loans to people with poor credit histories. | The sub-prime mortgage sector gives higher risk loans to people with poor credit histories. |
Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates. | Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates. |
This has raised fears that this could hamper credit availability in the broader market, not just in America, but around the world. | This has raised fears that this could hamper credit availability in the broader market, not just in America, but around the world. |