The world stared fear in its eyes yesterday. The stock markets went on a one-day steep fall starting with Asia followed on by Europe and finally hitting home in the US.
Dow Jones Industrial Average fell 3.58% to close below psychological 10,000 level at 9955. The Straits Times Index (STI) declined 5.6% to 2168, which was not seen since June 2005 (more than three years ago).
The various stock indices had fallen sharply losing between 58.7% to 25.8% from January this year.
6 Oct 08 2 Jan 08 Change (%)
Dow Jones (USA) 9955 13043 - 23.6
S&P 500 (USA) 1056 1447 - 27.0
FTSE100 (UK) 4589 6416 - 28.4
Germany DAX 5387 7949 - 32.2
Paris CAC40 3711 5550 - 33.1
Nikkei 225 (Japan) 10473 14691 - 28.7
Shanghai Composite 2173 5272 - 58.7
Hang Seng (HK) 16803 27560 - 39.0
Mumbai BSESN 11801 20465 - 42.3
Australia All Ord 4540 6434 - 29.4
New Zealand NZX50 2990 4033 - 25.8
STI (Singapore) 2168 3461 - 37.3
The credit crisis has moved on from US to affect the European financial institutions.
The fear now is that the world economies will slow significantly resulting from this financial crisis. It is a case of loss of confidence by investors after watching their investment portfolios dwindling in values by the days. They are cutting back on consumer expenditure hence hurting the economies in the process.
It is tempting to go into the stock market and buy shares of companies which have come off from their peaks and plumping new depths. The reality is when one buys into a stock and no sooner the share finds another new low.
The advices from most analysts have been that this is not the lowest level yet. It may still drop further and it may take six months to a full year in order to see a clearer trend for the stock market.
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