World stock markets ended one of
the most brutal quarters in years Friday, with bourses in New York and Europe
seeing sell-offs to match the 2008 crisis and the dot.com bubble.
World stock markets ended one of the most brutal quarters in
years Friday, with bourses in New York and Europe seeing sell-offs to match the
2008 crisis and the dot.com bubble.
The New York Stock Exchange stumbled to the end of its worst
three-months since the depths of the financial crisis exactly three years ago,
while markets in Italy, Germany and France lost a quarter of their value.
The Dow Jones Industrial Average closed the quarter down 12
percent from the start of July as fears of another global slowdown dogged
markets.
Compared with sister markets, traders in New York got off
lightly.
In Europe where debt worries have plagued several countries
and called the future of the eurozone into question, the sell-off was even more
pronounced.
In the last three months Italy's main stock exchange has lost
27 percent of its value, while Frankfurt's DAX and Paris' CAC-40 have each lost
25 percent.
In Madrid losses were limited to 18 percent and on London's
FTSE to just under 14 percent.
"We're closing the week, the month and the quarter on a
very, very negative note and on heightened volatility," said Peter
Cardillo of Rockwell Global Capital.
"It's been an ugly quarter. We had some good economic
news but nevertheless it's still a continuing fear factor."
The final downward push on Friday came from news of rising
inflation in Europe and declining purchasing power for Americans.
The US Commerce Department data that pointed to weakening consumer
power as incomes fell by 0.1 percent in August, the first decline in nearly two
years, even as prices for goods picked up.
"It seems very unlikely that consumers can lead the
economy to a faster recovery pace," economists John Ryding and Conrad DeQuadros
of RDQ Economics told clients in a briefing note.
Meanwhile there was unexpected news of sharply rising
inflation across the eurozone, creating a dilemma for European Central Bank
chief Jean-Claude Trichet who chairs his final policy meeting next week.
Trichet must now make a difficult call on whether to reduce
interest rates to face a weak economy despite rising prices.
With firm hopes by investors that major central banks ease
monetary policy in an effort to rekindle growth, inflation creeping up in the
eurozone is sure to disappoint as it probably makes a rate cut from the ECB
less likely.
In Asia, the Hong Sen Index plummeted 21.5 percent in the
quarter, while key Shanghai, Bombay, Australia and Japanese indices all slid in
the 11-14.5 percent range.
Throughout the last quarter Europe's sovereign debt crisis
loomed over investors, and Friday was no different.
In Athens EU-IMF auditors played cat-and-mouse with
protestors just as Greek Prime Minister George Papandreou in Paris gained
assurances from President Nicolas Sarkozy of France's commitment to Greece, one
day after German deputies agreed to boost the bloc's bailout fund.
France's own banks are critically exposed to sovereign debt
from Greece and other weak links in the eurozone chain -- Italy, Spain and
Portugal.
Fears on French and European banks have underscored major
market falls.
"It's been one hell of a third quarter and the
excitement of recent weeks is likely to continue over the next three
months," said Kathleen Brooks, analyst at trading group Forex.com.
"We end the quarter no closer to a long-term solution to
the European sovereign debt crisis ... and the global economic outlook is still
a confusing picture.
"The euro is looking weak ... and stocks, which have had
their worst quarter since 2008, look fragile. Will there be another leg lower
for risk, or will Germany save the eurozone and cause a huge relief
rally?" she said.
"These are the questions we grapple with as we enter the
last three months of the year."
Source : AFP
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