The turmoil continues on the world’s financial markets.
Wall Street plunged in early trading; at one stage in the first hour the Dow Jones Industrial Average was almost four percent lower.
That was one day after the US central bank, the Federal Reserve, tried to revive confidence by pledging to keep interest rates there at a record low for the next two years.
That caused a rebound yesterday but the effect did not last with investors full of fear about the state of the US economy and high levels of public debt there.
Olivier de La Ferriere, a fund manager with KBL Richelieu, said: “Despite yesterday’s rise, the market remains very volatile. That is because growth will stay weak. The Federal Reserve admitted that last night. So, in such an uncertain environment we think that investors will continue to be extremely nervous despite the Fed’s declarations which the market had very much anticipated.”
In Europe Paris was one of the worst performers as the cost of borrowing rose for the French government and President Nicholas Sarkozy calling a meeting with key ministers and his central bank chief. The French Finance Ministry has to deny that the AAA rating may be at risk and all three major ratings agencies also confirmed the rating.
The rest of Europe is a sea of red ink – yesterday’s optimism now gone and trading volume way above normal as investors flee shares.