Thursday, June 1, 2006
© Copyright 2014
Gwinnett Daily Post
LONDON - Global equity markets remained jittery Wednesday as growing fears about rising interest rates, inflation and the outlook for growth in the United States, the world's largest economy, fed into already overheated exchanges.
Many Asian stock indexes tumbled and trading in Europe was choppy as markets focused on fears that the issues in the U.S. could have an effect on world growth.
''It was an accident waiting to happen,'' said Julian Jessop, chief international economist at Capital Economics in London.
''The bigger problem is that markets have got complacent over the past few years,'' he added. ''Things seem to have been going well, economic growth has been strong, asset prices generally have been rising and rising and rising. We've simply got to the stage where not enough was being priced in for risk.''
Global markets have been on a general downward slide since the U.S. Federal Reserve raised its key interest rate to 5 percent on May 10. Japan's benchmark stock index has fallen almost 9 percent since then while Indian's main index has fallen nearly 20 percent. Most other major European and Asian indexes have dropped somewhere between 6 percent to 9 percent.
The trend continued this week as investors around the world were unsettled by the sharp drop Tuesday in U.S. markets, where concerns about consumer confidence and higher oil prices sent the Dow Jones industrial average tumbling 1.63 percent and the tech-heavy Nasdaq composite index down 2.06 percent.
In India, the Bombay Stock Exchange's Sensex index dropped 3.6 percent on Wednesday while stocks in Singapore fell 2.4 percent.
Japan's key stock index plunged 2.5 percent on Wednesday to its lowest level in three months. Investors dumped blue-chip electronics, brokerage and real estate stocks, sending the benchmark Nikkei 225 index down 392.12 points to 15,467.33 points, the lowest since Feb. 20.