World markets tumbled Friday on growing concern that no amount of government intervention will be able to stave off a global recession.
In Europe, Germany's DAX index fell 10.76% while the French CAC40 fell
10%, and the FTSE 100 in the U.K. fell 8.67%. In Asia Japan's
Nikkei 225 index slid 9.6%. Wall Street followed on the same course, with Dow Jones Industrial
Average futures down the maximum 550 points in premarket trading and
other U.S. indexes reacting in a similar fashion.
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The plunge did not appear tied to any specific market event, but rather
a growing sentiment that worldwide economies are slowing fueled by a
steady stream of profit warnings. Among the companies out with warnings
in recent days were Air France-KLM Group SA, Sony Corp., PSA Peugeot Citroën SA and Samsung Electronics, while U.S. automakers General Motors Corp. and Chrysler LLC both announced a new round of plant closings and layoffs on Thursday.
The U.K., meanwhile, reported its economy shrank by 0.5% in
the third quarter, its first contraction in 16 years. Chinese Premier
Wen Jinbao, addressing a meeting of 27 European Union member states and
16 Asian nations, said, "The global financial crisis has been constantly
spreading and worsening, creating a severe shock to global economic
growth," according to wire reports.
The International Monetary Fund, according to reports, is rushing to
approve a package that would allow certain emerging economies to
exchange their currencies for U.S. dollars in hopes of easing
short-term credit strains. A list including Hungary, Iceland, Belarus,
Ukraine and Serbia are in talks with the IMF about an emergency
facility.
One factor no longer influencing stock prices the way it did earlier in
the year is oil, which fell below $64 per barrel even after the
Organization of the Petroleum Exporting Countries announced plans to
cut production by 1.5 million barrels per day.
The slide could accelerate in New York once markets open, when caps on
losses in the futures markets are removed and traders have more
flexibility to react to world events. Traders seem to be expecting the
Federal Reserve to cut U.S. interest rates in the days to come in hopes
of stemming a deep recession. - Lou Whiteman
