Markets fluctuate as uncertainty continues
Wall Street stocks slumped on Wednesday but Asian and European markets appear to be weathering the storm as uncertainty over the US and eurozone economies continues.
The leading share indices in the United States all took a battering on Wednesday after initial hopes that a government decision to keep US interest rates low could stop the market slide.
The Dow Jones Industrial Average lost 4.6 per cent, the S&P 500 lost 4.4 per cent, and the Nasdaq Composite fell 4.1 per cent.
But London’s FTSE 100 opened up this morning, by around 1 per cent. The French CAC 40 was also up in early trading, as was the Dax in Germany.
However, after two weeks of volatility on global stock markets, there could still be gloom ahead, particularly if fears over the French economy materialise.
There are some concerns that the eurozone debt crisis could threaten France, with rumours that the country could see its AAA credit rating downgraded. The weakness of the US economy has also spooked investors, particularly after its credit rating was downgraded at the end of last week.
Economics Editor Faisal Islam, writing on Monday, predicted that France was the next big worry in the “north Atlantic game of Jenga” that was the debt crisis.
He said: “The big worry is if the unintended consequences of the sovereign worries expressed here in New York and the bazooka to help Italy starts to point investors to another EU nation.
“A nation as yet not downgraded by S&P despite having debt levels similar to the US, yet taking on heavy burdens from bailing out other European nations. Its AAA status being essential to the eurozone bailout. That nation is France.”
Read more from Faisal Islam’s blog: North Atlantic debt crisis ‘giant game of Jenga’.