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Global stocks in volatile trading | Global stocks in volatile trading |
(10 minutes later) | |
Global shares have seen mixed trading on Wednesday, with US housing and credit woes continuing to cast a shadow over stock markets. | Global shares have seen mixed trading on Wednesday, with US housing and credit woes continuing to cast a shadow over stock markets. |
US shares opened strongly, rebounding from Tuesday's heavy falls, with the Dow Jones index up 0.6% as investors looked to pick up bargains. | |
The UK's FTSE 100 index was largely unchanged at 6,104 by mid-afternoon, but Germany's Dax lost 0.2%. | |
A warning that a credit squeeze would hurt bank profits added to worries. | A warning that a credit squeeze would hurt bank profits added to worries. |
Earlier on Tuesday, Japan's main Nikkei index had closed down 275 points, or 1.7%, at 16,013. | Earlier on Tuesday, Japan's main Nikkei index had closed down 275 points, or 1.7%, at 16,013. |
Rate cut hope | Rate cut hope |
The Dow Jones was up 81.9 points at 13,123.4 in early trade on Wednesday, having closed 280 points, or 2.1% down, on Tuesday. Meanwhile the Nasdaq added 0.73% to 2,518.99. | |
Analysts said that investors hoped the volatility on global markets would be eased if, as many expect, the US Federal Reserve cuts interest rates next month. | |
"The market is a little oversold, and bargain hunters are coming into the equation," said Weeden & Co strategist, Steve Goldman. | |
"The market is also getting closer to when the Fed will lower rates." | |
Tuesday's fall came after another warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - from investment bank Merrill Lynch. | |
We need more momentum...in order to start reversing some of yesterday's awful losses Peter DixonAnalyst, Commerzbank class="" href="/1/hi/business/6953779.stm">Market jitters and your wallet | |
The bank downgraded its opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup. | |
"We need more momentum I think in order to start reversing some of yesterday's awful losses," said Commerzbank economist, Peter Dixon. | |
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. |