If the central banks were hoping for an immediate and positive response from the world’s stock markets to the coordinated interest rate cuts they were disappointed. After some initial euphoria, trading was extremely volatile due to fears that the coordinated rate cuts will not unfreeze the credit markets and avert a global recession.
Overall European shares were down more than six and a half per cent and the FTSE EuroFirst 300 fell to its lowest level since mid December 2003. Of the biggest stock markets, London slumped 5.18%, Paris 6.31% and Frankfurt 5.88%.
Investors are selling shares to move into so called safe haven areas, like gold and treasuries.
The losses on stock markets this week have been huge. One widely watched guide to share values… the MSCI world index… is on track for its worst week in the 20 years it has been in its current form. On expectations of lower demand, oil prices also made major declines.