A Bear Out There?

• January 22nd, 2008
• Posted by EUEditor

Sharp falls in share prices on European markets on Monday continued across the globe.

Markets in Australia closed 7.3% down on Tuesday (22.1.08); the value of local stocks fell by A$100-billion, the worst single-day’s fall since 1989, taking the market back to levels of 2006.

A Financial Times summary:

“Tumbling Asian shares – which continued to fall early on Tuesday – led European stock markets into their biggest one-day fall since 9/11 as the prospect of a US recession and further fall-out from credit market turmoil prompted near panic among investors, who rushed to the safety of government bonds.

“About $US490-billion [A$572-billion; dcerates.com, 22.1.08] was wiped off the market value of Europe’s FTSE Eurofirst 300 index and $148bn from the FTSE 100 index in London, which suffered its biggest points slide since it was formed in 1983. Germany’s Xetra Dax slumped 7.2 per cent to 6,790.19 and France’s CAC-40 fell 6.8 per cent to 4,744.45, its worst one-day percentage point fall since September 11 2001.”

Talk of a “sweeping sell-off” and “carnage” on markets was picked up in one BBC commentary, asking whether a “Bear” market was now settling in — defined as a 20% drop in values against recent peaks:

“Many European markets are already in that territory, or very close.

“In Paris and Milan the leading shares indexes are down more than 20% from recent peaks, while Frankfurt’s Dax is very close to that mark. The London FTSE 100 index is also close to being down more than 20% from its recent peak, hit in June last year.

“Japan was the first of the world’s big markets to enter bear market territory, notching up a 20% decline last November. Elsewhere in Asia and the Pacific region, stocks in Australia, India, Indonesia, Singapore, Taiwan and Thailand have all fallen at least 20% from recent highs.

“In the US, the benchmark Dow Jones index is down 14% from its high hit in October last year.”

Reference:

Australian Stock Exchange Info.com (Home), 22.1.08. http://www.australianstockexchangeinfo.com/index.html, (22.1.08).

BBC, “Should we fear a ‘bear’ market?”, 21.1.08. www.bbc.com/ … , (22.1.08).

Joanna Chung and Robert Orr in London, Andrew Wood in Hong Kong, “Panic sparks plunge in global markets”, Financial Times, 21.1.08. http://www.ft.com/… , (22.1.08).

Emma O’Brien, “Australia’s S&P/ASX Drops Most in a Decade, Enters Bear Market”, Bloomberg.com, 22.1.08. http://www.bloomberg.com/ … , (22.1.08).

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