Dow's day of turmoil unsettles London
Thursday 06 August 1998
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.
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 3 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 4 April Fools' Day 2015: The best hoax news stories from around the internet
- 5 Gamers confess the worst things they've done in The Sims
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
Katie Hopkins reported to the police for race hatred by Labour MP Simon Danczuk after tweet about Pakistani men
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...