Monday, March 17, 2003

German Dax Decline now equals that of 1929

The news from global stock markets gets grimmer every day. It is probably going to get worse before it gets better. Which leaves us with the question: how much permanent damage is all this likely to cause?

Another bout of turbulence on world markets Wednesday sent share prices tumbling, at one stage pushing Germany's Dax index down to a level 73 per cent below its peak - a scale of decline last seen in the 1929 crash. War jitters, bad corporate news and rumours surrounding the future of Tony Blair, British prime minister, drove a sell-off across Europe. Some analysts speculated that markets are now approaching the point of "capitulation" - the final stage of a bear market characterised by rapid selling.In London indiscriminate selling sent the FTSE 100 on its seventh biggest daily fall - down 5 per cent to 3,287, its lowest level since April 1995. The dividend yield on the UK equity market has also risen above the yield on benchmark government bonds for the first time since 1957. Frankfurt's Dax index fell 4.9 per cent to 2,192 in early evening trade - its lowest point for seven years. It closed at 2,202.96. In Paris, the CAC index slid 3.6 per cent to another six-year low.
Source: Financial Times

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