LONDON, 16 August 2007 — Global stock markets slid further yesterday as they battled persistent jitters over a credit crunch started by problems in the US subprime loan sector and as broader concerns emerged about the US economy.
The UK’s FTSE-100 dipped 0.6 percent to 6,106.50. France’s CAC-40 declined 0.6 percent to 5,444.12 and Germany’s DAX lost 0.5 percent to 7,386.2. In Asia, Tokyo and New Zealand benchmarks tumbled to their lowest closes in nine months.
“Market volatility is going to continue until the extent of the problem is properly known,” said Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers.
“It may take a few weeks for positions to unwind and for banks to hold their hands up and reveal how much they are exposed to.” Stocks in the US wobbled after the Dow Jones industrial average briefly dipped below 13,000 as Wall Street kept a close eye on the Federal Reserve and how much more cash it might inject into the banking system. The Dow industrials fell 0.2 percent to 13,005.35, the S&P 500 Index slipped 0.1 percent to 1,425.64, while the NASDAQ Composite Index declined 0.1 percent to 2,497.73.
Some economists and dealers in Asia said the stock market gyrations were short term. Some issues could even be good bargains, they said, given the strong growth and earnings data from China, Japan and other regional economies.
In Brazil, the main index for the Bovespa exchange dropped 0.3 percent to 50,758.5. Brazil’s currency, the real, traded above the psychologically important 2-to-the-dollar level for the first time in months in intraday trading.
There was no sign yesterday of a fifth consecutive move by the European Central Bank to inject more money to alleviate nervous banks as a weekly tender of €292.5 billion ($397.54 billion) and a one-day loan of €7.7 billion ($10.47 billion) came due. Tuesday’s one-day offer from the ECB — much smaller than cash infusions during the previous three trading days — brought the total amount lent since Thursday to €211 billion ($286.77 billion).
Major central banks around the world have also provided extra funds, but on a smaller scale, and central banks in Japan and Australia have even started draining funds from the money market.