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article imageA Horrible Day In The Global Market As Indexes Slump Around The World

By Michelle Duffy     Jan 21, 2008 in Business
All around the world, leading stock indexes have confirmed their worst fears - each and every one of the giant indexes including the UK FTSE 100 have recorded their biggest declines since 9/11
According to British news today, one of the leading share indexes, the London FSTE 100, has fallen dramatically by 5.5% meaning a massive £84bn has been erased of the value of their entire list of shares.
The staggering figure, ($163bn) is just one of the biggest falls in value which has also gripped the indexes in Paris, Frankfurt, Asia, India and South America - their drops are said to be around 7% off their lists usual value.
It has been described as a "horrible day" in the world of the stock market and experts are now poised as to what to do next. Many are arguing that to lead the U.S forward in a bid to "boost" it's economy will have the adverse effect and send the country down hill into a "full blown" recession.
Speaking from Hong Kong, Francis Lun of Fulbright Securities said,
"It's another horrible day. Today it's because of disappointment that the US stimulus is too little, too late and investors feel it won't help the economy recover."
This graph showing the decline of the value in the share index over the last month is quite shocking, yet it shows quite clearly the global market problem as it is today, (see above.)
At least the markets in the U.S have had time to digest the slumps as today was a public holiday, yet the dawn of a tomorrow is looming and there will be many a cold sweat breaking out between now and then.
The main concern is for the result of tax breaks and spending limits. Since the housing market has suffered a few major problems of late, the population will be very reluctant to spend anymore than they already have. From the UK's point of view, we can understand. As house prices continue to rise in the UK, meaning many, if not all, first time buyers are now priced out of the market completely, the economy grinds to a halt and that day is today.
Back in the US, mortgage repayments have hit an all time high meaning residents are even more reluctant to spend what little money they have left, thus affecting the stocks.
Pulling in the purse strings are also the banks. As they are more likely to hang on to their money as opposed to lending it out, they are feeling the pinch from the stocks in which banks invest heavily in to.
We don't have to be reminded that the U.S plays a massive part in the world's economy. We, in the UK and the rest of the world rely obsessively on America to buy our products, so the news today is not just bad for the Americans, it doesn't go down to well with the rest of us.
However, there will be a certain niche of the world which will go largely unaffected. Those with their fingers on the big corporate button will not feel so much as a sneeze from the slumps of a Black Monday. The big hot shots in the world will continue to grow, through profit alone, if nothing else.
Speaking from France at Robeco, Hugues Rialan suggested,
"It's becoming more and more difficult as the market is now in panic mode. We're falling back into the crisis of confidence in the financial sector. The banks have been reassuring the market over their exposure to US mortgage-related investments, but now we realise there is nothing reassuring about it."
However, in some corners of the retail globe, there were some who have sat back fairly comfortably at the day's events. One could even say that a few had even taken stock and smiled at the idea that U.S interest rates heading for the ground.
Speaking from Brewin Dophin Securities, Mike Lenhoff said,
"If interest rates are cut to the extent we and others expect, the likelihood is that today's share prices will look like silly values in 12 months' time, if not before."
China has not gone amiss either in the fall of the value in stock lists today. South Korea, Singapore, Taiwan and the Philippines all fell victim to the tumbling felt by every major index around the world.
In the east, and in Mumbai in particular, the main Sensex index fell 1,408 points, or 7.4%, adding a load of worry on top of an already slumped 8% from last week. Hong Kong's Hang Seng fell with great speed 1,383.0 points, or 5.5%, to bitterly close at 23,818.9. Tokyo's main Nikkei 225 index fell a significant 3.9%, bringing the current east of the globe into pitiful misery.
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