Tough times on Wall Street where shares slumped on the first day of trading after Standard and Poor’s downgraded the United State’s credit rating from AAA, reigniting fears the world’s biggest economy could slip into recession again.
Investors are still trying to gauge the knock-on effects for the financial system.
With the sell off they are also sending the message to politicians worldwide that they are not doing enough to address the problems threatening the global economy.
Senior trader Will Hedden with IG Index in London doesn’t see an end in sight soon: “We’ve definitely got a long way to go yet, we’ve still got problems in the euro zone. The US issues definitely aren’t over, and they’re obviously coming up to an election, so that’s going to play on their markets as well, so I don’t think we should be jumping to going on holidays just yet.’‘
European shares are also sharply lower.
The European Central Bank’s announcement that it was buying Spanish and Italian government bonds to try to stop the euro zone debt crisis spreading had only a limited short term effect.
Investors seeking a safe place for their money piled into gold which hit a new record above $1,700 an ounce for a while. The dollar is down, the euro is volatile and oil slipped more than $3 a barrel on concern over a slowdown in economic growth.