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Home / Business / Companies

World markets echo Wall Street plunge

NZ Herald
20 Nov, 2008 06:00 PM3 mins to read

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KEY POINTS:

World stocks fell sharply overnight (NZT), as recession fears gripped markets and briefly sent oil prices below US$50 a barrel.

The FTSE 100 index of leading British shares closed down 130.69 points, or 3.3 per cent, at 3,874.99, while Germany's DAX was 133.89 points, or 3.1 per cent,
lower at 4,220.20. The CAC-40 in France was 107.47 points, or 3.5 per cent, lower at 2,980.42.

US stocks were in retreat though trading was volatile. The Dow Jones index of leading US shares was down another 81.32 points, or 1.0 per cent, at 7,915.96, on top of Wednesday's 427 point decline.

Meanwhile, the broader S&P 500 was down 11.78 points, or 1.5 per cent, at 794.80, but had been nearly 30 points down earlier at 776.76.

The latest bout of selling in the US was stoked by a Labor Department report showing that new applications for jobless benefits unexpectedly rose to a 16-year high of 542,000 last week from a downwardly revised figure of 515,000 in the previous week. Analysts had been expecting a modest decline to around 505,000.

The gloomy global economic outlook was reflected in oil prices, which fell below US$50 a barrel for the first time since January 2007. Light, sweet crude for December delivery was down $2.67 at US$50.95 a barrel in early-afternoon London trade.

Stocks have been in retreat for most of the week amid concerns about the global economy after further grim US economic news and as the Big Three Detroit-based automakers pleaded to be bailed out by Congress.

So far, Japan, Hong Kong and European countries including Germany and Italy are officially in recession and most expect the US and Britain to be joining them soon, whatever fiscal stimulus policy-makers come up with in the coming days and weeks.

Businesses have been quick to respond to the gloomy outlook by cutting jobs. Most notably, Citigroup said Monday that it is cutting 53,000 jobs around the world.

In Japan, Isuzu Motors Ltd. fell 17 per cent after the truck maker said it will cut 1,400 contract workers as it scales back production for this fiscal year. Isuzu is the latest automaker to announce production cuts, joining domestic rivals such as Toyota Motor Corp. and Honda Motor Co.

In Britain, aircraft engine maker Rolls-Royce PLC said it plans to cut up to 2,000 jobs next year as demand for its products slumps amid the global economic downturn.

PACIFIC - ASIA

Earlier, Tokyo's benchmark Nikkei 225 average slid 570.18 points, or 6.9 per cent, to 7,703.0 as figures showed exports in October sank 7.7 per cent, the biggest decline since 2001, causing the country - an export powerhouse - to report a rare trade deficit.

Elsewhere in Asia, South Korea's main index fell for its eighth straight session, losing 6.7 per cent to 948.69, as the country's currency, the won, fell to its lowest level in more than a decade. Hong Kong's Hang Seng benchmark sank 517.24 points, or 4 per cent, to 12,298.56.

In Australia, the main stock measure retreated 4.2 per cent as weakening commodity prices dragged down the country's natural-resource giants.

Compared to the rest of Asia, mainland China's markets suffered modest losses, after speculation over a possible deal by Disney to build a long-awaited theme park in Shanghai boosted property shares. The benchmark Shanghai Composite Index fell 1.7 per cent.

The dollar weakened 0.9 per cent to 94.99 yen, while the euro was steady at $1.2518.

- AP

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