Business: The Economy...from BBC news
" Markets braced for fresh falls
Traders are preparing for losses after New York's drop
Traders, businesses and investors worldwide are braced
for stock markets to plunge when they open for the
week, following a near-record dive on Wall Street.
New York's main index recorded the sixth-largest
single-day points loss in its history on Friday.
And in response, share prices in Europe fell to their
lowest levels for months.
The main barometer of the New York stock market's
form, the Dow Jones index, finished Friday down 267
points at 10,019. At one point it briefly dropped below
10,000.
That finished a bad week for the
Dow, which lost more than 5% of its
value in five days. It is now more
than 10% below its high recorded on
25 August of 11,326.
Wall Street traders had been
watching to see whether the index
would crash down below the 10,000
barrier it first rose through on 29
March this year.
When it reversed through it
on Friday there was a cheer
from the trading floor, but it
was more ironic than the
jubilant one which rang out
seven months ago.
Within minutes of the New
York Stock Exchange
closing, thoughts were
already turning to the likely
effect on markets in the Far
East and Europe on Monday.
A loss of confidence could
lead to waves of panic-selling - and self-perpetuating
losses.
This week marks the 12th anniversary of Black Monday,
when markets lost up to a quarter of their value.
The reason for Friday's fall was a warning by US central
bank head Alan Greenspan that stocks were over-valued,
and a set of economic figures which suggested that
inflation is threatening to take a grip again.
One portfolio manager said he believed Greenspan had
been trying to put a dampener on the stock market so it
would not be so strong going into the Christmas
shopping season.
A strong market, combined with rising consumer sales,
could lead to an interest rate rise.
The Dow Jones index has been the main driving force for
the rise - and recent fall - in many other stock markets
around the world, such as London, where the benchmark
FTSE index fell more than 2% on Friday to its lowest
level since February.
Mr Greenspan's comments came despite a fall of more
than 10% in the value of the benchmark Dow Jones
index in the past three months.
But a further sell-off was sparked by the news that US
wholesale prices rose at their fastest rate for nine years
in September, raising interest rate fears again.
In London the FTSE 100 index, which
reflects the share price of the 100
largest listed companies, fell more
than 2%, 132 points, to 5,907.
That was its lowest level for more than
eight months. It is getting closer to
the 5,770 low point of the year.
In Frankfurt the benchmark Dax closed down 36.06
points, or 0.69%, at 5,220.29 while in France the Cac-40
index was 59.21 points lower at 4,524.42, its lowest level
since the end of August. "
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