2008 Woodie Awards
World stock markets plunge
Nathan Thomas
Issue date: 3/5/07 Section: BizTech
- Page 1 of 1
Investors were shaken Monday when former Federal Reserve Chairman Alan Greenspan noted a possible U.S. recession later this year. A substantial fall occurred in many of the world’s markets on Tuesday as investors in China rapidly sold off stocks.
Shanghai’s stocks plunged by almost nine percent. That marks the biggest drop since the death of Communist Party elder Deng Xiaoping in 1997.
The Shanghai index dropped from Monday’s record high of 3,040.60.
“The most important reason for today’s decline was pressure for profit-taking,” said Peng Yunliang, a senior analyst at Shanghai Securities. “People viewed 3,000 as a psychological benchmark. It’s understandable they might want to pull back after the market hit that peak.”
Shanghai’s stocks, volatile all year, fell among speculation of economic slowdown. The rest of the world was shaken shortly afterward.
In Asia, Singapore’s Strait Times Index fell 2.3 percent and Hong Kong’s Hang Seng Index dropped by 1.8 percent. Japan and Taiwan registered much smaller declines.
“Corrections usually happen because of a catalyst, and this may be it,” said Ed Peters, chief investment officer at PanAgora Asset Management. “The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop.”
Many worldwide companies with ties to Asia were hit. Standard Chartered PLC, a British bank largely dependent on Asia, stumbled by 2.1 percent on the London Stock Exchange.
U.S. markets fell as well. The three major U.S. stock indexes: The Dow Jones Industrial Average, the S & P 500 Index, and the Nasdaq Composite Index dropped between three and four percent. This wiped out all of the 2007 gains.
The Dow closed down 416.02 on Tuesday, which is a 3.29 percent decline. This is the most severe fall since the terrorist attacks of Sept 11, 2001.
The price of oil dropped among speculation that the slowing Chinese economy would also slow the demand for fuel. Exxon Mobil Corp dropped the most in both the S&P 500 and the Dow. Its stock price fell by nearly five percent.
The U.S. drops were caused from several pressures. A government report showed that January orders of U.S. durable goods such as computers, airplanes and home appliances fell by the largest amount in three months. The fall compounded concerns about the Shanghai index drop and fears about the mortgage market for people with poor credit. However, many analysts are not worried.
“It’s my belief that the economy is going to be fine,” said Ed Keon, chief investment strategist with Prudential Equity Group in New York. “We’ve just fallen back to where we were in the latter part of 2006. Markets go through these corrective processes time to time, and you can’t say exactly when they’re going to occur. Today was our day.”
Shanghai’s stocks plunged by almost nine percent. That marks the biggest drop since the death of Communist Party elder Deng Xiaoping in 1997.
The Shanghai index dropped from Monday’s record high of 3,040.60.
“The most important reason for today’s decline was pressure for profit-taking,” said Peng Yunliang, a senior analyst at Shanghai Securities. “People viewed 3,000 as a psychological benchmark. It’s understandable they might want to pull back after the market hit that peak.”
Shanghai’s stocks, volatile all year, fell among speculation of economic slowdown. The rest of the world was shaken shortly afterward.
In Asia, Singapore’s Strait Times Index fell 2.3 percent and Hong Kong’s Hang Seng Index dropped by 1.8 percent. Japan and Taiwan registered much smaller declines.
“Corrections usually happen because of a catalyst, and this may be it,” said Ed Peters, chief investment officer at PanAgora Asset Management. “The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop.”
Many worldwide companies with ties to Asia were hit. Standard Chartered PLC, a British bank largely dependent on Asia, stumbled by 2.1 percent on the London Stock Exchange.
U.S. markets fell as well. The three major U.S. stock indexes: The Dow Jones Industrial Average, the S & P 500 Index, and the Nasdaq Composite Index dropped between three and four percent. This wiped out all of the 2007 gains.
The Dow closed down 416.02 on Tuesday, which is a 3.29 percent decline. This is the most severe fall since the terrorist attacks of Sept 11, 2001.
The price of oil dropped among speculation that the slowing Chinese economy would also slow the demand for fuel. Exxon Mobil Corp dropped the most in both the S&P 500 and the Dow. Its stock price fell by nearly five percent.
The U.S. drops were caused from several pressures. A government report showed that January orders of U.S. durable goods such as computers, airplanes and home appliances fell by the largest amount in three months. The fall compounded concerns about the Shanghai index drop and fears about the mortgage market for people with poor credit. However, many analysts are not worried.
“It’s my belief that the economy is going to be fine,” said Ed Keon, chief investment strategist with Prudential Equity Group in New York. “We’ve just fallen back to where we were in the latter part of 2006. Markets go through these corrective processes time to time, and you can’t say exactly when they’re going to occur. Today was our day.”
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thinktank
posted 3/05/07 @ 7:56 AM MST
International Institute of Management (IIM) released a new report warning about the U.S. economic risks. The report:
1. Uncovers the forces behind Feb 27th stock market meltdown and the Chinese reaction to the outlook of U. (Continued…)
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