NEW YORK - Stock markets around the world plummeted overnight and oil prices plunged to their lowest in more than a year. Even gold, the traditional safe haven in times of panic, fell sharply.
The common denominator was growing fears that governments, central banks and finance ministers seem powerless to stop the deepening of a global recession that will slam corporate earnings and lead to deep job losses around the world.
The Dow Jones industrial average dropped more than 420 points in early afternoon trading. Before the open of New York trading, Dow futures had dropped 550 points, triggering a temporary trading halt in stock futures contracts in an effort to slow the decline.
"This is beyond volatile: It is chaotic," Carl Weinberg, chief economist at High Frequency Economics wrote in note to clients. "This is the kind of day when the central banks step into the market with an 'unexpected' interest rate move to calm things down."
Treasury Secretary Henry Paulson is monitoring the markets and staying in close touch with market participants, a spokeswoman said.
Advertisement
Advertisement
Oil fell sharply and traded near US$63 a barrel amid weakening global demand for crude - despite a decision by the Opec cartel to cut production quotas by 1.5 million barrels a day from next month.
The dollar plunged below 93 yen, a 13-year low. Gold fell as low as US$681 an ounce, its lowest since January last year.
It was a black Friday overseas. Japan's Nikkei stock average dropped 9.6 per cent. Germany's benchmark DAX index plunged as much as 10.8 per cent, France's CAC40 slid 10 per cent and Britain's FTSE 100 shed 8.7 per cent. Stocks in Hong Kong fell 8.3 per cent.
Russian stocks fell sharply, the two main exchanges shut early and won't resume trading until Tuesday.
"We are getting used to wild swings in the markets, but today's moves verge on the bizarre," said Julian Jessop, chief international economist at Capital Economics.
The only good news was the 5.5 per cent increase in September existing home sales. Median home prices, however, dropped to US$191,600, down 9 per cent from a year ago.
The U.K.'s third quarter gross domestic product fell 0.5 per cent, with the steepest decrease in 18 years putting the country on the brink of recession. Shares of Japan's Sony sank more than 14 per cent when it slashed its earnings forecast for the fiscal year. In Germany, Daimler's stock dropped 11.4 per cent in morning trading; it reported lower third-quarter earnings and abandoned its 2008 profit and revenue guidance.
Emerging market economies and currencies are coming under extreme pressure. Investors are pulling money out of countries in Eastern Europe, Latin America and Asia on fears vulnerable countries will not only be hit hard by the financial crisis but may also default on debt.
