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US follows stock market sell-off
BBC
Thursday, March 1, 2007
World shares have dropped for a third day on concerns
about economic growth and the outlook for corporate profits.
A large slide in Europe and Asia was compounded by a drop on US
indexes. The Dow Jones and S&P 500 indexes fell 0.3%, while
the Nasdaq lost 0.5%.
London's FTSE 100 index closed 0.9% lower. It has shed 5% in three
days, wiping more than £80bn of its value.
The global sell-off was triggered by fears of a new tax in China
on Tuesday, and has now spread to wider issues.
Shares fell 9% in Shanghai on Tuesday, their biggest daily reverse
in 10 years, and dropped a further 87.99 points on Thursday, closing
2.9% lower.
On Thursday, Germany's Dax and France's Cac both fell 1.1%. Earlier
in the day, Japan's Nikkei 225 index had closed 0.9% lower, while
Hong Kong's Hang Seng slipped 1.6%.
Spreading out
Since Tuesday and China's tax worries, investors have become more
concerned about the state of the US economy and strength of the
mortgage market.
On Wednesday, figures from the US Commerce Department showed that
the US economy grew at a slower-than-expected pace of 2.2% in the
last three months of 2006.
Other figures showed that spending on new home building fell 19.1%
during the quarter, the sharpest drop since early 1991, adding to
worries over the state of the housing market in the world's largest
economy.
"The biggest risk in the next few weeks is likely to come
from the US data front and developments in the mortgage and housing
markets," said analysts at JP Morgan Chase.
Losses in the US were trimmed slightly thanks to good manufacturing
data that helped allay some of investors' fears but it was not enough
to turn the market around.
"Right now, everything and anything is viewed in a negative
light," said stock analyst Dick Green. "It will take a
while for the fears to calm down."
Heady heights
At the same time, investors are questioning whether stock prices
have climbed too high, too quickly.
A number of the world's main indexes have broken records recently,
and analysts said that corporate earnings may not be good enough
to underpin the gains.
It is not unusual for stock markets to have a significant correction,
and then go on to even higher levels.
Last May, the UK's FTSE lost more than 9% in three weeks, before
recovering and surging to its highest level in more than six years
in February, 2007.
"Investors are still wondering if the storm is actually over
or not," said Masatoshi Sato, a senior strategist at Mizuho
Investors Securities.
"Aftershocks in some markets, where prices are overvalued,
may be seen from now on. Volatile and sensitive trading is likely
to continue at least until mid-March," he added.
INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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