The FTSE plummets as concerns for an imminent recession grow.
Rumours of a global recession are rife this morning after a nightmare start to the week saw markets across the globe experience their worst day of trading since the September 11th terrorist attacks in 2001.
In the UK the FTSE finished down 232.5 points at 5578.5 with over £70billion wiped off the value of blue chip shares. Similar losses were experienced throughout Europe, Asia and beyond with Japan’s Nikkei closing down 5.7%, Germany’s Dax dropping 2.4% and Australia’s All Ordinaries Index falling over 7% in a shocking shake up that has sent waves of panic through financial markets everywhere. In India the Sensex dropped 9.8% in minutes enforcing a one hour compulsory shutdown that only emphasises the volatility of the situation.
The London stock exchange opened to turmoil again this morning with shares plummeting 3% soon after opening. However, while we are by no means in the clear, the FTSE has started to claw its way back up to less worrying levels at least in the short term.
Despite US exchanges being closed for business yesterday it’s largely down to the current uncertainty surrounding America's economic future that has caused such financial turmoil around the world.
On Friday, in an attempt to rectify the situation and restart the US economy, President Bush announced drastic plans to share out almost £150billion of tax relief to businesses and individuals in the USA. Unfortunately, this proposal did not have the desired effect and the US Federal Reserve have now stepped in with an emergency rate cut, shaving a remarkable three quarters of a percent off the already low interest levels.
Whether this calms the global market has yet to be seen, however when you combine this week’s FTSE activity with the stagnating housing market and beginnings of a credit crunch, the UK’s financial prospects for 2008 aren’t looking rosy.
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