Investors’ focus shifts to global recession

| October 16, 2008 | 0 Comments

Global shares have plummeted this morning on the news that some of the world’s largest economies are bracing themselves for recession.

Reports that unemployment in the UK soared by 164,000 to 1.79 million in the three months to August, are adding to fears, as well as the news that retail sales in the US fell at double the rate expected by analysts, suffering their worst fall since 1992.

Japan’s Nikkei index fell 11% today, while Hong Kong’s Hang Seng fell 7.6% to 14,785.60 points.

In London, the FTSE 100 fell 3.1%, sending it below the 4,000 mark, France’s Cac 40 index lost 3.8% and Germany’s Dax fell 2.2%.

Germany, Europe’s largest economy, has slashed its forecast for economic growth next year from 1.2% to 0.2%, after the country is believed to be on the brink of a recession.

Meanwhile, last night, New York’s Dow Jones industrial average plunged by 733 points (8%) as investors‘ focus turned to the weakening US economy, rather than the $250 billion banking bailout which lifted markets earlier this week.

According to Yutaka Miura, senior strategist at Shinko Securities, yesterday’s news of a 1.2% fall in the value of US retail sales between August and September, has unnerved investors and confirms a sharp slowdown in the US economy.

Ben Bernanke, the chairman of the US Federal Reserve, warned yesterday that the US economy is now under serious threat from the credit crisis, but pledged that the Fed would continue to fight the credit crisis.

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