American economy at risk of overheating
Fears of renewed turbulence on the world's financial markets grew yesterday after it emerged that the head of the US Federal Reserve had told Western finance ministers he could not rule out a crash for the American economy.
Alan Greenspan recently told ministers of the seven richest nations it was impossible to dismiss the possibility that the US economy could overheat, but said he did not think that was a danger now, according to reports yesterday.
The revelation came as shares in Tokyo, the only major market open on Good Friday, suffered a 4 per cent slump on its main blue-chip index.
The Fed chief spoke "very frankly" about the risks for the US economy, Business Week quoted Italian Treasury Minister Giuliano Amato as saying after he met with Mr Greenspan and other central bankers and finance ministers at the G7 meetings last weekend.
The discussions were held against a background of sharp falls in global shares, after official figures showed US underlying inflation rose in March at its fastest pace in five years. The news sparked fears that the Fed would raise interest rates by 0.5 per cent rather than the quarter-point already discounted by the markets.
Meanwhile, the Nikkei 225 index plunged in the final hours of trading yesterday. In the last 30 minutes of dealing, the index dived almost 5 per cent before recovering to close down 3.73 per cent at 18,252.68.
Analysts stressed that the fall was largely due to insecurity ahead of a reshuffle in membership of the index next week. In contrast, most other Tokyo stock indices rose. The day left the Nikkei investors nursing their worst weekly loss since September 1990 - an 11 per cent fall.
Traders said they hoped the Nikkei would recover next week as institutions used the cash from yesterday's sales to buy-up the new entrants.
The focus shifts to Europe and the US in the coming week. GDP figures in the US and UK for the first three months of 2000 will be announced, with economists looking for signs of a gentle slowdown.
US data on Thursday are expected to show a fall from the previous quarter's blistering 7.3 per cent to 5.8 per cent. Figures for the UK, out on Friday, are forecast to show a slowdown in quarterly growth to 0.7 per cent from 0.8 per cent, following recent figures showing that the manufacturing sector is struggling.
The European Central Bank meets on Thursday to decide whether to raise interest rates.
- 1 Student jailed for hacking University of Birmingham computers to improve his grades
- 2 Smartphones are making children borderline autistic, says psychiatrist
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
- 5 The most powerful passports in the world
Student jailed for hacking University of Birmingham computers to improve his grades
Smartphones are making children borderline autistic, says psychiatrist
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
Royal baby: Live updates as the wait continues for Duchess of Cambridge's second child
Hermann Goering's daughter fails to reclaim items looted by Nazi deputy during WWII
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...