Gold9472
03-05-2007, 05:04 PM
Global markets extend dive
http://rawstory.com/news/afp/Global_markets_extend_dive_03052007.html
Published: Monday March 5, 2007
European and Asian shares plunged again on Monday as turbulent trading conditions stretched into a second week, with an expected lower opening on Wall Street likely to add momentum to the global downturn.
Equities began tumbling last week as investors sought to take profits from high stock prices and cut their exposure to risk amid warnings of a strong correction to markets after many indices hit multi-year peaks earlier in the year.
Investors were spooked last week by sharp falls in Chinese share prices and comments about a possible recession in the United States by former Federal Reserve chairman Alan Greenspan.
"Some sort of consolidation was due and with a background of rising interest rates, the markets were vulnerable, and along came a lot of profit-taking in China and that was enough to kick-start the whole thing," said Mike Lenhoff, analyst with Brewin Dolphin Securities in London.
"What we are seeing is the progress of a correction and ... it will run its course when the markets have got to a 10-percent correction from top to bottom," added Lenhoff, who sees the FTSE hitting a low of about 5,800 points.
World stock markets suffered steep losses of between four and ten percent last week.
In European trade on Monday, London's FTSE 100 index of leading shares tumbled 1.93 percent to 5,998.00 points, marking the first foray beneath 6,000 since October 9, 2006.
Frankfurt's DAX 30 dived 2.36 percent to 6,447.18 points and in Paris the CAC 40 plunged 1.90 percent to 5,321.40.
"Losses (on Wall Street) ahead of the weekend break have already taken their toll on Asian markets in early trade and the impact is likely to be significant for European stocks," said Matt Buckland, trader at CMC Markets.
A fresh wave of selling had struck US stocks on Friday at the end of a bad week for global markets, as economic concerns resurfaced and investors retrenched before the weekend.
On Monday, the Tokyo market extended its losing streak to a fifth trading day, closing down 3.34 percent at the lowest level for over two months on concerns about the health of global markets and a stronger yen, dealers said.
Investors in Chinese stocks endured a rollercoaster ride last week as the key index in Shanghai recorded its sharpest single-day decline in 10 years amid fears the government would slap capital gains taxes on securities investments.
On Monday, the Shanghai Composite Index fell 1.63 percent to 2,785.31 points.
"It did start with what happened in China," Lenhoff said of last Tuesday's near 9.0-percent plunge in Chinese share prices.
"All you need is some sort of trigger for a shake-out if markets are vulnerable, which they were anyway because they had risen without any major consolidation since the trauma of last May."
However, he added that many investors regarded the current climate as a potential time to snap up shares on the cheap.
"Long term investors are always on the lookout for buying opportunities and they will take the view that valuations in equity markets look okay, and the outlook for economic activity globally is still very good."
Other financial markets were roiled by the continued downturn.
Crude oil prices dropped about a dollar per barrel on Monday as traders reacted to heavy falls in equities.
The yen meanwhile hit three-month highs against the the dollar and euro on Monday, as the Japanese currency continued to benefit from the global stock market slump, dealers said.
They added that the dollar's slump against the yen highlighted an unwinding of so-called yen carry trades by speculators who have binged on Japan's cheap credit to fund investments elsewhere.
Analysts say that no one really knows the true size of the yen carry trade, but there are fears of a severe fallout if the credit bubble bursts.
"The unwinding of the yen carry trade will only stop if stability returns to global markets," said Masaki Fukui, senior economist at Mizuho Corporate Bank.
http://rawstory.com/news/afp/Global_markets_extend_dive_03052007.html
Published: Monday March 5, 2007
European and Asian shares plunged again on Monday as turbulent trading conditions stretched into a second week, with an expected lower opening on Wall Street likely to add momentum to the global downturn.
Equities began tumbling last week as investors sought to take profits from high stock prices and cut their exposure to risk amid warnings of a strong correction to markets after many indices hit multi-year peaks earlier in the year.
Investors were spooked last week by sharp falls in Chinese share prices and comments about a possible recession in the United States by former Federal Reserve chairman Alan Greenspan.
"Some sort of consolidation was due and with a background of rising interest rates, the markets were vulnerable, and along came a lot of profit-taking in China and that was enough to kick-start the whole thing," said Mike Lenhoff, analyst with Brewin Dolphin Securities in London.
"What we are seeing is the progress of a correction and ... it will run its course when the markets have got to a 10-percent correction from top to bottom," added Lenhoff, who sees the FTSE hitting a low of about 5,800 points.
World stock markets suffered steep losses of between four and ten percent last week.
In European trade on Monday, London's FTSE 100 index of leading shares tumbled 1.93 percent to 5,998.00 points, marking the first foray beneath 6,000 since October 9, 2006.
Frankfurt's DAX 30 dived 2.36 percent to 6,447.18 points and in Paris the CAC 40 plunged 1.90 percent to 5,321.40.
"Losses (on Wall Street) ahead of the weekend break have already taken their toll on Asian markets in early trade and the impact is likely to be significant for European stocks," said Matt Buckland, trader at CMC Markets.
A fresh wave of selling had struck US stocks on Friday at the end of a bad week for global markets, as economic concerns resurfaced and investors retrenched before the weekend.
On Monday, the Tokyo market extended its losing streak to a fifth trading day, closing down 3.34 percent at the lowest level for over two months on concerns about the health of global markets and a stronger yen, dealers said.
Investors in Chinese stocks endured a rollercoaster ride last week as the key index in Shanghai recorded its sharpest single-day decline in 10 years amid fears the government would slap capital gains taxes on securities investments.
On Monday, the Shanghai Composite Index fell 1.63 percent to 2,785.31 points.
"It did start with what happened in China," Lenhoff said of last Tuesday's near 9.0-percent plunge in Chinese share prices.
"All you need is some sort of trigger for a shake-out if markets are vulnerable, which they were anyway because they had risen without any major consolidation since the trauma of last May."
However, he added that many investors regarded the current climate as a potential time to snap up shares on the cheap.
"Long term investors are always on the lookout for buying opportunities and they will take the view that valuations in equity markets look okay, and the outlook for economic activity globally is still very good."
Other financial markets were roiled by the continued downturn.
Crude oil prices dropped about a dollar per barrel on Monday as traders reacted to heavy falls in equities.
The yen meanwhile hit three-month highs against the the dollar and euro on Monday, as the Japanese currency continued to benefit from the global stock market slump, dealers said.
They added that the dollar's slump against the yen highlighted an unwinding of so-called yen carry trades by speculators who have binged on Japan's cheap credit to fund investments elsewhere.
Analysts say that no one really knows the true size of the yen carry trade, but there are fears of a severe fallout if the credit bubble bursts.
"The unwinding of the yen carry trade will only stop if stability returns to global markets," said Masaki Fukui, senior economist at Mizuho Corporate Bank.