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Global stocks see sharp declines Economy woes leave stocks mixed
(about 1 hour later)
European shares lost ground on Monday, mirroring falls in Asia as concerns grew about the US economy.European shares lost ground on Monday, mirroring falls in Asia as concerns grew about the US economy.
The UK's FTSE 100 index ended 1.1% lower at 6,459 while Germany's Dax lost 1.2%, and France's Cac shed 1.4%.The UK's FTSE 100 index ended 1.1% lower at 6,459 while Germany's Dax lost 1.2%, and France's Cac shed 1.4%.
And on Wall Street, the Dow Jones index lost ground - extending Friday's heavy fall which first prompted the slumps. However on Wall Street, shares reversed earlier losses to move into positive territory - clawing back a little of Friday's heavy falls.
Investors fear that uncertainty over firms' exposure to credit problems is having a damaging impact on the economy and company profits. Investors fear that uncertainty over companies' exposure to credit woes is denting the economy and firm's profits.
There are also concerns that that the full effects of the US housing slowdown have not yet been seen. There are also concerns that that the full effects of the US housing slowdown have not yet been seen, analysts say.
Caterpillar warningCaterpillar warning
The Dow Jones, the main US share index, fell 367 points on Friday, the 20th anniversary of the Black Monday stock market crash.The Dow Jones, the main US share index, fell 367 points on Friday, the 20th anniversary of the Black Monday stock market crash.
And it had lost another 65 points, or 0.5%, to 13,456 points in late-morning trading, though the tech-heavy Nasdaq index was 0.1% ahead. But it was 48 points, 0.4% ahead, at 13,570.2 in afternoon trading while the tech-heavy Nasdaq index was 1% ahead.
Earlier, Tokyo's Nikkei index closed 2.2% lower as markets across Asia suffered fresh jitters.Earlier, Tokyo's Nikkei index closed 2.2% lower as markets across Asia suffered fresh jitters.
Friday's slump on Wall Street is going to dominate market sentiment as the new trading week gets under way Matt Buckland, a trader with CMC Markets Q&A: What's troubling the markets? Our economy is slowing down, and I don't think we're going to be able to make it all up in profits overseas Victor Pugliese, a trader with First Albany Q&A: What's troubling the markets?
Last Friday's slump started when the building equipment firm Caterpillar cut its profit forecast, blaming the state of the economy.Last Friday's slump started when the building equipment firm Caterpillar cut its profit forecast, blaming the state of the economy.
Caterpillar added that the US economy would be "near to, or even in, recession" next year.Caterpillar added that the US economy would be "near to, or even in, recession" next year.
'Sentiment driven''Sentiment driven'
"Friday's slump on Wall Street is going to dominate market sentiment as the new trading week gets under way," said Matt Buckland, a trader in London with CMC Markets. "Our economy is slowing down, and I don't think we're going to be able to make it all up (in profits) overseas. So I think we have a little bit more downside," said Victor Pugliese, a trader with First Albany in San Francisco.
"Obviously there's speculation that we may see a repeat of the losses from Black Monday some 20 years ago, and with little economic data being scheduled for release, it's going to be sentiment rather than the fundamentals that provide the bulk of the direction." "You would think you'd have some follow-through from Friday, and that we still have a way to go down."
On Black Monday in 1987, the Dow Jones fell 23%, which nowadays would mean a drop of more than 3,000 points.On Black Monday in 1987, the Dow Jones fell 23%, which nowadays would mean a drop of more than 3,000 points.
The fall on the FTSE 100 comes after it had recovered from the panic that gripped markets in August in the wake of the global credit squeeze.The fall on the FTSE 100 comes after it had recovered from the panic that gripped markets in August in the wake of the global credit squeeze.
Last month the US Federal Reserve slashed interest rates from 5.25% to 4.75%, making borrowing cheaper, in a bid to encourage more consumer spending and corporate activity.Last month the US Federal Reserve slashed interest rates from 5.25% to 4.75%, making borrowing cheaper, in a bid to encourage more consumer spending and corporate activity.
And some believe that policy makers will reduce rates again when they meet next week.And some believe that policy makers will reduce rates again when they meet next week.