Author Topic: STOCKS, OIL PRICES, US DOLLAR SLUMP  (Read 1520 times)

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STOCKS, OIL PRICES, US DOLLAR SLUMP
« on: September 30, 2008, 01:41:42 PM »
 Stocks, oil prices, US dollar slump

United States and European shares have tumbled after the $700bn US bail-out was rejected and amid a slew of bad news from the troubled banking sector.

Wall Street shares fell more than five per cent after Congress surprised observers by not backing the rescue plan - the Dow Jones at one point losing 705 points, according to the Associated Press.

London’s key index had lost 5.3 per cent - its biggest one-day drop since January.

Confidence had been smashed by the forced rescue of US bank Wachovia and Bradford and Bingley’s nationalisation.

The Dow Jones index was 450 points (four per cent) lower at 10,690 points after the result emerged - throwing efforts to calm the US financial crisis into disarray. The tech-heavy Nasdaq lost 5.9 per cent.

The losses had been heavier, but were pared slightly as investors took advantage of cheap prices.

Meanwhile the dollar fell against other major currencies.

And concern that a worsening economy would reduce energy demand saw the price of US light, sweet crude slump by $11.39 a barrel to $95.50 on Monday – the second biggest drop in dollar terms ever on an active contract – as the government’s proposed $700bn bailout was defeated by the House, adding to concerns about the spread of economic weakness worldwide.

Monday’s price decline comes exactly one week after oil spiked $16.37, marking its largest one-day gain ever, as traders scrambled to buy futures before the expiration of the October contract.

But that rally was “technical in nature” and did not result in any “bullish follow through,” said Stephen Schork, oil industry analyst and publisher of the Schork Report.

Instead, the market is “focusing on the real demand destruction in place right now,” Schork said.

Economic weakness worldwide, combined with a seasonal downturn in demand for petroleum products, could drive the price of oil to $75 a barrel, according to Schork.

The fall on the FTSE 100 was its biggest one-day drop since January, with Germany and France’s main markets seeing falls of five per cent and 4.2 per cent respectively.

The market moves came on another eventful day of global financial turmoil, which has been described as the “worst” since the credit crunch began.

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STOCKS, OIL PRICES, US DOLLAR SLUMP
« on: September 30, 2008, 01:41:42 PM »

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