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Shares fall on US economy fears | Shares fall on US economy fears |
(40 minutes later) | |
Stocks have fallen in Wednesday trading, with Europe following Asian shares lower on renewed fears about the US economy. | |
The UK's FTSE 100 index was down 18 points or 0.3% to 5,850 in initial exchanges, while Germany's Dax had lost 0.6%, and Paris' Cac had fallen 0.4%. | |
Japan's main Nikkei 225 index had earlier closed down 4.7%. | |
The falls echo overnight declines on Wall Street following news that the US service sector is now contracting. | |
America's main Dow Jones index ended Tuesday trading down 3%. | |
Both the Nasdaq and S&P 500 indexes also lost 3%. | |
'Bear market' | 'Bear market' |
"It's unbridled pessimism," said Francis Lun, general manager at Fulbright Securities in Hong Kong. | "It's unbridled pessimism," said Francis Lun, general manager at Fulbright Securities in Hong Kong. |
There's a real probability that both the US and Europe will go into recession at the same time Francis Lun, general manager at Fulbright Securities in Hong Kong | |
"Everyone is concentrating on a US recession, but Europe is also looking bad. We are in for a bear market now." | "Everyone is concentrating on a US recession, but Europe is also looking bad. We are in for a bear market now." |
The weak US service sector data came from the Institute of Supply Management's index of business activity in the non-manufacturing sector. | The weak US service sector data came from the Institute of Supply Management's index of business activity in the non-manufacturing sector. |
Its January reading came in at 41.9, the first recorded monthly contraction in almost five years. | |
With any number above 50 indicating growth, economists had forecast a milder decrease to 53 from 54.4 in December. | |
"There's a real probability that both the US and Europe will go into recession at the same time," added Mr Lun. | "There's a real probability that both the US and Europe will go into recession at the same time," added Mr Lun. |
"It's a financial mess on the two continents with the sub-prime crisis and the SocGen debacle." | "It's a financial mess on the two continents with the sub-prime crisis and the SocGen debacle." |