Global markets reel with US credit drop

A pedestrian watches falling shares on a stock indicator in Taipei, Taiwan, Tuesday, August 9, 2011

Source: Press TV
http://www.presstv.ir/detail/193050.html

World stock markets continue to spiral downward after the historic downgrading of the US credit rating and lingering EU debt crisis have wreaked havoc on investor confidence.

Global stocks suffered further losses on Monday despite promises by G7 and G20 leaders to boost the world economy and the European Central Bank (ECB) announcement to alleviate concerns over the Eurozone debt crisis by buying up Italian and Spanish government bonds, the Washington Post reported.

Major Asian indexes sank between two and seven percent in the opening hours, with the benchmark MSCI's index of Asia Pacific shares, excluding Japan, also dropping 2.2 percent.

On Tuesday, Tokyo dropped 4.43 percent at the outset, Hong Kong shed 7.24 percent in the first few minutes, Sydney lost 4.91 percent and Seoul went down 7.5 percent while Taipei shares suffered a loss of more than five percent.

The European financial markets have also experienced significant drops in recent days, despite the ECB's pledge of purchasing the troubled Italian and Spanish debt.

London's Key FTSE 100 index went down 1.7 percent on Monday - the first day of international trading after the US credit downgrade - while in debt-crippled Greece, shares on the Athens Stock Exchange continued to fall to levels unseen since the mid-1990s.

The US markets also plunged at Monday's closing over mounting fears of recession following the loss of the country's triple-A rating in the list of creditworthy nations.

The DAX index in Frankfurt went down 2.4 percent, as the Dow Jones industrial average dived 634 points, or about 5.55 percent, in one of its steepest declines ever on the first full day of trading since the historic downgrade.

Investors are now anxiously awaiting the results of efforts by industrialized countries aimed at allaying concerns in markets as both sides of the Atlantic have been engulfed in financial and debt crises.

The uncertainty in global markets follows a fall in US futures prices, which was brought about after Standard & Poor's downgraded the United States' triple-A rating by one notch on August 5, from the top AAA to AA+, for the first time in the history of ratings amid concerns over the country's massive debt.

According to a recent default-preventing debt bill passed by the US Congress, the country's debt ceiling was raised by $2.4 trillion, to the level of $16.7 trillion, just a few hours before the August 2 deadline.