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Global Stocks, U.S. Futures Plunge on Credit Concern; Yen Gains

Michael Patterson
Bloomberg [1]
Wednesday, Oct 8, 2008

Stocks tumbled worldwide for the fifth day, U.S. index futures plunged and government bonds rallied after the U.K.’s $87 billion bank bailout plan failed to restore confidence in the financial system.

Japan’s Nikkei-225 Stock Average fell 9.4 percent, the third-biggest decline on record, and all but seven of the companies in the U.K.’s FTSE 100 Index dropped. Russia and Indonesia halted stock trading after benchmark indexes plummeted more than 10 percent. Futures on the Standard & Poor’s 500 Index slumped more than 25 points, while yields on two-year Treasury notes declined 7 basis points to 1.39 percent.

“Investors are capitulating,” said Oumkaltoum El Ouarti, a fund manager at KBL Richelieu Gestion, which has $6.2 billion in Paris. “There’s a crisis of confidence. We need to see action on a global scale.”

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The yen strengthened as traders retreated from higher- yielding investments funded in Japan, bringing its gain against the euro to 6.9 percent this week. Commodities fell, led by a 5.6 percent drop in copper traded on the London Metal Exchange, on concern that the freeze in global credit markets will stifle economic growth. The cost of borrowing in euros for three months rose to a record for a ninth day as banks hoarded cash.

The MSCI World Index of 23 developed markets lost 2.9 percent to 1,009.76 at 10:41 a.m. in London, bringing its five- day drop to 15 percent, the steepest on a closing basis since October 1987.

  • A d v e r t i s e m e n t

`Recessionary Mindset’

Europe’s Dow Jones Stoxx 600 Index declined 5.4 percent as Barclays Plc fell 8 percent. S&P 500 futures lost 2.9 percent as Alcoa Inc. retreated 5 percent. The MSCI Asia Pacific Index fell 7.2 percent and Mitsubishi UFJ Financial Group Inc. tumbled. The MSCI Emerging Markets Index declined 7.3 percent to the lowest since October 2005.

Full article here [1]