Hong Kong fall sets scene for turmoil in markets

LONDON MARKETS are braced for further turbulence today after a sharp fall in the Hang Seng index and further declines on Wall Street as dealers continued to fret about the crisis in Russia.

The Duma's decision to reject Vicktor Chernomyrdin as prime minister came after the close of European markets, but analysts said the move would increase fears of a worsening situation in Russia.

As London traders return to their desks today after the August bank holiday, they will face markets still jittery after further volatile sessions yesterday.

Hong Kong stocks were the hardest hit with the Hang Seng losing almost 6 per cent of its value in the first seven minutes of trading yesterday following a government retreat from its massive buying campaign last Friday.

The Hang Seng eventually closed 7 per cent lower, or 544 points down, at 7,275.04. In Frankfurt, the Xetra DAX fell 114.52 points, or 2.32 per cent to close at 4,811.28. Some dealers are forecasting a further 300 point fall.

In France the CAC-40 fell 57.12 points, or 1.54 per cent to 3,651.85 on thin volume.

In Russia, where the rouble crisis sparked the global downturn, the RTS1- Interfax index dipped 1.74 per cent on minimal volume.

In Brazil, where share prices fell by 40 per cent in August, a further two per cent fall was registered when European markets closed.

Markets had drawn comfort early on from a 1.38 per cent rally in Tokyo stocks. The Nikkei closed 192.6 points higher at 14,107 though elsewhere in Asia most share markets took a tumble.

Wall Street opened strongly and was up 43 points at one stage, but that confidence soon disappeared and the early gains turned into a 135 point fall (by 4.40pm), the first time the market had slipped below the 8,000 mark since 2 February.

The Nasdaq Composite was also hammered, shedding 4.5 per cent at one stage.

On Wall Street dealers were pessimistic yesterday : "People are piling out of technology stocks," one senior trader said. "There is no news behind the plunge, just all round liquidation."

However, in London, some leading economists were more sanguine. Michael Hughes, a director of Barings Asset Management, said: "Until you can pinpoint some new news, this market will be directionless.

"The really good news would be US or UK interest rates starting to fall, but that might not happen until October or November," he said. "Until then the focus will be on the bad news, particularly the Russian situation. Uncertainty there will cap the market for a while.

"But there is no doubt that we are starting to see some semblance of value in the UK and, to some extent, in Asia."

Attention this week will shift to a meeting between American President Clinton and Boris Yeltsin.

The pair meet tomorrow while Mr Yeltsin is still grappling with the financial crisis and a political vacuum following his decision a week ago to dismiss the government led by former Prime Minister Sergei Kiriyenko.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links