Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point
On Air
Feedback
Low Graphics
Help

Tuesday, September 1, 1998 Published at 13:59 GMT 14:59 UK


Business: The Economy

Wild swings on Wall Street



Wall Street started to rally strongly on Tuesday after Monday's dramatic 512-point loss - but it was a volatile ride.

Eight minutes after opening the Dow Jones - main index for the New York Stock exchange, was up some 80 points.


[ image: Getting nervous on Wall Street]
Getting nervous on Wall Street
It went on to hit an early peak of 7,682 at 1352 GMT - a rise of more than 140 points.

However the gains were shortlived and the index quickly plummeted within the space of 40 minutes to hit 7,401.

The rollercoaster continued with the Dow rebounding a second time but this time managing to hold onto its gains.

Two hours from Tuesday's close, it was up 158.34 points (2.1%) to 7,697.41 points at 1355 local time (1755 GMT).


The BBC's Ed Crooks: "Another day of chaos"

Across Europe share prices were still having trouble recovering from heavy losses on early Tuesday morning.

London was particularly hard hit, after a bank holiday had spared the City from Monday's rout.

After just one hour of trading, London's FTSE 100 index had lost 173 points or 3.2%. After lunch however, London's key market indicator recovered.

It closed down 80.3 points at 5169.1.


[ image: Brazil's stockbrokers know that Latin America's markets can be the next target]
Brazil's stockbrokers know that Latin America's markets can be the next target
Thirty minutes into floor trading Germany's main index the Dax had crashed through the 4,700-points, losing more than 3%. But it closed down just 42 points at 4791.81.

The Paris Bourse was in a similar situation, down 117 points or 3.3% shortly after opening, but the market's benchmark index, the CAC-40 recovered to 3,646, down a mere 5.6 points.


[ image:  ]


On Monday, the Dow Jones index had suffered the second-highest point drop in its history, falling below the 8,000 level. It was a loss of more than 6% and larger than its 483-point decline over the whole of last week.

The Nasdaq index, listing the shares of many high-technology companies, suffered a historic plunge, losing more than 140 points or 8.5% to close at 1,499.

Back to square one

American investors who entered the US stock market in January have now lost all their gains accumulated this year. Just over six weeks ago, the Dow Jones had peaked above 9,300 points.

Much of New York's plunge happened after most other world markets had closed, fuelling fears of another nervous week on the world's stockmarkets.

Asian turmoil continues

Asian stockmarkets had another bad day with the Malaysian stockmarket leading the fall.

The Kuala Lumpur Composite index slumped a massive 13.3%, or 40.21 points, to 262.7 after Malaysia's central bank announced controversial measures to clamp down on international currency speculators.

It unveiled tight currency controls, setting a fixed rate for the Malaysian ringgit and only allowing the currency to be traded within the country.

Hong Kong is still 'recovering' from the market intervention of the territory's administration, which artificially boosted share prices. Now prices are sliding again. The marked closed down almost 3%, or 212.6 points, at 7062.5.

The Japanese market is already so depressed that the impact from Wall Street was somewhat smaller than expected.


[ image: A strong yen continues to boost Tokyo shares]
A strong yen continues to boost Tokyo shares
Tokyo's Nikkei index even managed to stage a late rally to gain 261 points, closing at 14,369.63 - up 1.85%.

Another rocky day in Latin America

Investors are also steering clear of Latin American stockmarkets, with shares in Mexico, Brazil and Chile all taking a battering on Monday.

Dealers fear that this could be the next region to come under pressure as money flows out of emerging markets to the relative safe haven of US government bonds.

Selling spree

The Dow Jones index has now fallen 19.2% since its high of 9,337 on July 17, erasing all of its 17% gain over 1998.


Former US Treasury undersecretary Jeffrey Schafer: "Russia doesn't need money, it needs policy"
Responding to the fall, the American Treasury Secretary, Robert Rubin, said the world was going through a difficult period, but the United States economy was in good shape to cope with it.

Correspondents say the economic problems in Asia and Russia, and concerns about Latin America, seem to have prompted some investors to reduce their exposure to the equity market until the situation clarifies.


[ image: Hong Kong shares are still on the slide]
Hong Kong shares are still on the slide
They say that, while Russia is a tiny trading partner for the United States, its crisis has sparked fears over the risks of other economies where bilateral trade is much larger. This has led to a selling spree by investors in New York.

BBC business correspondent Patrick O'Donnell says the big debate is whether this amounts to an over-reaction, since the economies of the US, China and Western Europe are relatively strong.

He says the key to the question over any looming global recession is how resilient they will now prove to be.





Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents

Relevant Stories

01 Sep 98 | The Economy
London shares crash

01 Sep 98 | Asia-Pacific
Malaysia tackles economic crisis

31 Aug 98 | The Economy
August, the share market's silly season

31 Aug 98 | The Economy
UK considers G7 crisis talks

28 Aug 98 | The Economy
Flight to security

28 Aug 98 | The Economy
Hong Kong battles recession and speculators





In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree