Turmoil on the stock market continues
The turmoil on the stock market continued for a second day yesterday resulting in a certainty that interest rates will be cut next month.
Howard Archer, chief UK & European economist of Global Insight, said with equity markets suffering sharp losses, there is a developing case for an interest rate reduction.
On Monday, a whopping £77 billion was wiped off the FTSE-100.
The FTSE which consists of Britain’s leading 100 companies, dropped 323.5 points as investors bailed out amid fears the US, the world’s largest economy, was heading for a recession.
The Federal Reserve cut interest rates yesterday by three quarters of a per cent to 3.5% as America was confronted with the increasing possibility of a recession. This was the biggest cut ever.
David Buik of City bookmakers Cantor Index said he’d never seen anything like it, city traders were acting like ‘headless chickens’ as they tried to follow the violent ups and downs.
Severe falls were reported in Asia. Japan’s Nikkei index plummeted over 3% to its lowest level since October 2005. The same occurred in Europe, with Germany’s DAX index falling 7% at one point and the CAC-40 in France declining nearly 6%
Market strategist David Jones of spread-betting firm IG Index, is forecasting more turmoil and said anyone who says this is just a healthy correction is looking through rose-tinted glasses.
He added the Footsie has broken below last year’s low and is within 130 points of the 2006 low, that shows how dramatic this has been.
However, in spite of analysts urging people not to panic, there will undoubtedly be growing concerns for millions of savers and consumers.
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