Thursday, August 11, 2011

Markets plummet over economic woes

Source: Press TV

Stock markets in the US and Europe have plummeted amid renewed worries of a weak economic growth in the United States as well as a possible credit downgrade of France.

After a slight recovery on Tuesday, the Dow Jones industrial average dropped by as much as 474 points on Wednesday, AFP reported.

The NASDAQ Stock Market together with Standard & Poor's 500 dropped by about three percent in value within the first minutes of trading.

Meanwhile, stock markets across Europe, including London, Frankfurt, Paris, Rome as well as Moscow plummeted right before closure.

Italian stocks dropped the most followed by French stocks with a decline of over six percent and five percent respectively.

Societe Generale, the second largest bank in France, witnessed a drop in its share value by as much as 23 percent.

The pessimism on Wednesday came as experts speculated on a possible double dip recession in the US and further focused their attention on Europe's debt problems.

France is the most indebted European triple-A country and there have been rumors that it might be the first to get its credit rating slashed after the US.

France, however, denied such rumors and major rating agencies announced that they have no plans to downgrade the country.

Tuesday's late session rally was partly due to the announcement made by the US Federal Reserve that it planned to keep interest rates extremely low at least until 2013.

The rally was “so unbelievably fast, it's as though every computer on Wall Street hit the point where the program said buy, buy, buy, buy, buy,” said Daniel Alpert, a managing partner of investment bank Westwood Capital.

“Machines don't read [Federal Reserve] announcements, people do - and they were reacting in a negative way,” he added.

Markets also dropped as investors begun replacing riskier assets with gold as they fear leaders are failing to tackle the debt crisis in the US and Europe.

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