Credit crisis rocks the world

Global stock markets recorded some of their biggest-ever falls on 'Black Friday'. Sarah Arnott reports
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By the end of the day, yesterday was being dubbed "Black Friday" by Australian market watchers. Panicked by the global crisis, traders sold down A$106bn (£40bn) of stock – the Sydney exchange's second-worst one-day performance. The All Ordinaries Index was down 8.2 per cent at 3960.7. The S&P/ASX 200 also nosedived, closing more than 8 per cent down, its biggest one-day loss ever.


The Nikkei has had the worst week in its history, shedding almost a quarter of its value. The stock average lost nearly 10 per cent yesterday alone – its biggest one-day fall in 20 years – to close at 8276. The index has plunged by 46 per cent this year. Yesterday also saw the collapse of Japan's 98-year-old life insurance group, Yamato, with debts of Y269bn (£1.6bn). The Bank of Japan injected Y4.5trn into the money markets to try to improve credit liquidity. Exchanges in Tokyo and Osaka briefly suspended trading in some future and options.


Shares plummeted for the sixth consecutive day to leave its two main bourses down by 12 per cent over the week. The Shanghai Composite Index dropped by 3.57 per cent, the smaller Shenzhen Component Index by 5.52 per cent, despite measures earlier in the week designed to restore confidence.


After the government confirmed that Singapore's export-dependent economy has gone into recession for the first time in six years, the city-state's Straits Times index closed off 7.7 per cent at 1940. The economy shrank by 6.3 per cent in the third quarter, having lost 5.7 per cent in the three months before.


The central bank cut the cash reserve ratio by 150 basis points – three times the expectation – to 7.5 per cent. The move released R600bn (£7.3bn) into a banking system so cash-strapped the overnight rate had ballooned to a 19-month high. But official figures showing industrial growth of just 1.3 per cent in August, compared with 10.9 per cent last year, sent stocks into freefall anyway. The Sensex lost 1000 points, rallying only slightly to close down 800.51 points or 7 per cent. The Nifty ended down 6.65 per cent.


Russian stock exchanges suspended trading yet again. Vladimir Putin, the Prime Minister, announced plans to invest 175bn roubles (£3.94bn) in Russian stocks this year, and the same amount in 2009. The government also guaranteed the first 700,000 roubles of all deposits. The Duma passed anti-crisis measures making $50bn available to companies needing to re-finance foreign debt and 950bn roubles in subordinated loans to the country's main banks.


All share-trading was suspended. The Prime Minister Geir Haarde is scheduled to meet with the Russian government next week to discuss the possibility of a $5.5bn loan to avoid national bankruptcy. A delegation from the IMF is already in Reykjavik.


After excessive losses, nearly half of Milan stocks were suspended but the benchmark S&P/Mib was still down 4.5 per cent by the afternoon. The regulator widened a month-long ban on short selling to include all shares. The Prime Minister Silvio Berlusconi floated the idea that the EU suspend all markets temporarily.


Panic-selling sent the FTSE 100 spiralling. In the worst week since the 1987 crash, the index closed down by 8.9 per cent, its third-biggest one-day fall in percentage terms, taking it below the 4000-point mark for the first time since 2003.


A year to the day after its all-time high, the Dow Jones Industrial Average collapsed by 700 points, or 8 per cent, within the first 10 minutes of opening. By close of trading it was still down by 7.3 per cent at 8579.19, a combined drop of almost 21 per cent this month.


The Bovespa was off by 10 per cent in early trading, triggering an automatic half-hour halt in trading. By mid-morning losses were at 6.5 per cent. Two years of gain have been wiped off Brazilian stock market gains by the global crisis, and the currency is also dropping.