Dow's day of turmoil unsettles London

THE AMERICAN stock markets gave investors a rollercoaster ride yesterday, staging a series of large-scale declines and recoveries before closing up on the day. But few analysts believe the equity markets have seen the end of their current period of volatility, and the selling may not yet have run its course.

The Dow Jones Industrial Average closed up 59.47 points at 8,546.78. But the market had zig-zagged dramatically throughout the day: the Dow opened up 26 points, quickly slid 75 points and then recovered to stand about 80 points up at midday.

In the afternoon it plunged by over 100 points, and at one point was more than 10 per cent below the 9,337.97 record reached just three weeks ago, before staging a dramatic recovery in the last hour of trading.

However, the bounce came too late to help European stock markets, which had a nervous day's trading. In London, the FTSE 100 closed 103.6 points down at 5,632.5, having at one point been 163 points lower.

The German DAX index ended 2.15 per cent lower, while the French CAC- 40 index closed down 1.78 per cent.

For once, Asian markets seemed largely immune to the market fluctuations in the US, and there was even a glimmer of light in Japan, where the stock market registered only a minuscule loss and the battered yen managed a modest recovery.

The new government gave the go-ahead for a bank rescue plan by providing bridging finance and confirmed that the highest rate of income tax was being cut from 65 to 50 per cent.

In Hong Kong, where the link to American markets is reinforced by the currency's tie to the US dollar, the blue-chip Hang Seng index only declined 1.5 per cent. "I think the market has held extremely well considering," said Adrian Faure of Merrill Lynch in Hong Kong.

City experts said there was no obvious trigger for Tuesday's fall in the Dow Jones - the third-biggest one-day points loss ever. Strategists said dealers were nervous about a range of issues, including the White House scandals, Asia and US corporate earnings.

James Montier, global strategist at BT Alex.Brown, said: "Anything that causes uncertainty is a problem when markets are so stretched."

Some investors in the US saw the decline as a buying opportunity, and analysts' comments helped to buttress the market. Goldman Sachs strategist Abby Joseph Cohen, a well-known bull, said she remained confident in the market and reiterated her 1998 target of 9,300 for the Dow.

Other US stock market measures were also up. The technology-intensive Nasdaq composite ended up 2.33 at 1,787.97, and the broadly-based S&P 500 was up 9.32 at 1,081.44.

However, analysts predicted that the markets would remain jittery over the near to medium term. Mr Montier said: "This could develop into a 15 per cent correction over the next month or so, although that is not a crash by any standards."

Declining issues outnumbered rising stocks by eight to six on the New York Stock Exchange, reflecting the broader concerns about the prospects for corporate profits for the rest of the year.

There was also a bout of unsettling rumours from China, where it was reported that the local currency was trading at a four-year low against the US dollar on the black market. This suggests that investors are preparing for a devaluation of the yuan.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power