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US stocks slide amid credit fears US stocks slide amid credit fears
(about 2 hours later)
Major US stock markets have opened down after confidence in the banking sector was dented further by the resignation of Citigroup's chief executive.Major US stock markets have opened down after confidence in the banking sector was dented further by the resignation of Citigroup's chief executive.
Markets in Europe and Asia have also seen falls in reaction to Charles Prince's exit, the second departure of a leading banking boss within days.Markets in Europe and Asia have also seen falls in reaction to Charles Prince's exit, the second departure of a leading banking boss within days.
The Dow Jones fell 0.6% to 13,514.87, the Nasdaq dropped 0.9% to 2,784.79, and the S&P slipped 0.7% to 1,498.71.The Dow Jones fell 0.6% to 13,514.87, the Nasdaq dropped 0.9% to 2,784.79, and the S&P slipped 0.7% to 1,498.71.
Stock markets in London, Paris and Frankfurt were also trading lower. Stock markets in London, Paris and Frankfurt all declined on Monday.
Credit squeezeCredit squeeze
The FTSE 100 benchmark index was down 1.4% at 6,438.40 in mid-afternoon trade in London, with Barclays, Northern Rock and Alliance & Leicester among the financial stocks seeing the largest falls. The FTSE 100 benchmark index closed down 1.06% at 6,461.4 at the end of the trading session in London, with Barclays, Northern Rock and Alliance & Leicester were among the financial stocks seeing the largest falls.
In Frankfurt, the Dax index was down 0.6% at 7,803.28, while in Paris the benchmark Cac index slipped 0.96% to 5665.37. In Frankfurt, the Dax index ended 0.53% lower at 7,807.55, while in Paris the benchmark Cac index slipped 0.63% to 5,684.62.
The risk in the market is credit risk Jim Awad, WP Stewart Asset ManagementThe risk in the market is credit risk Jim Awad, WP Stewart Asset Management
By the close of trade in Asia the Hang Seng index was down 5% at 28,942.3 in Hong Kong, while in Japan the Nikkei had fallen 1.5% to 16,268.9. By the close of trade in Asia the Hang Seng index was down 5% at 28,942.3 in Hong Kong - its largest single day fall - , while in Japan the Nikkei had fallen 1.5% to 16,268.9.
Worries over banks' exposure to US sub-prime related debts has been causing market instability for several months.Worries over banks' exposure to US sub-prime related debts has been causing market instability for several months.
Shares of Citigroup dropped more than 4% in early US trade, and those in JP Morgan Chase fell more than 2%. Shares of Citigroup dropped almost 5% in afternoon US trade, and those in JP Morgan Chase fell 0.6%, paring earlier losses.
Meanwhile Merrill Lynch fell 3.2%, Morgan Stanley fell 3.6%, Goldman Sachs fell 3.4%, and Bank of America fell 1.8%. Meanwhile shares in Merrill Lynch, Morgan Stanley and Bank of America all sunk, hitting 12-month lows before rebounding slightly as the session wore on. Goldman Sachs fell 4.17%.
'More to come''More to come'
"The risk in the market is credit risk," said Jim Awad, chairman of WP Stewart Asset Management in New York."The risk in the market is credit risk," said Jim Awad, chairman of WP Stewart Asset Management in New York.
"You're getting plenty of indications that there are more write-downs to come. The fear is that if you get the credit market seizing up again, that could affect the economy going forward.""You're getting plenty of indications that there are more write-downs to come. The fear is that if you get the credit market seizing up again, that could affect the economy going forward."
It is feared that the current credit squeeze - triggered by banks' unwillingness to lend while they assess the size of potential sub-prime mortgage related losses - will hit growth in the global economy.It is feared that the current credit squeeze - triggered by banks' unwillingness to lend while they assess the size of potential sub-prime mortgage related losses - will hit growth in the global economy.
Citigroup disclosed that its losses stemming from bad sub-prime related investments could amount to between $8bn and $11bn (£3.8bn and £5.2bn).Citigroup disclosed that its losses stemming from bad sub-prime related investments could amount to between $8bn and $11bn (£3.8bn and £5.2bn).
Mr Prince's departure followed the departure of Merrill Lynch boss Stan O'Neal last week after the firm suffered its first quarterly loss in five years.Mr Prince's departure followed the departure of Merrill Lynch boss Stan O'Neal last week after the firm suffered its first quarterly loss in five years.
Traders digesting the scale of the crisis in the US banking sector are worried about the exposure of European banks to worthless sub-prime related assets.Traders digesting the scale of the crisis in the US banking sector are worried about the exposure of European banks to worthless sub-prime related assets.