Global stocks at 5-1/2 year low

Special Correspondent

Rising jobless claim in the U.S. to deepen the recessionary pressure further

Japan’s Nikkei down 570 points

Sensex loses 323 points

MUMBAI: The deepening recessionary trend around the globe, which hit banks and automakers, sent the world stocks to 5-1/2 year lows. Asian markets, especially Japan and Hong Kong were vulnerable as their benchmark indices dipped more than 500 points on Thursday.

The rising jobless claim, which rose to a 16-yaer high in the U.S., is expected to deepen the recessionary pressure further.

The news that the U.S. economy could shrink by 0.2 per cent through 2009 and the U.S. automakers, General Motors Corp, Ford Motor Co and Chrysler LLC are at risk of bankruptcy if a last-minute bail-out plan fails, sent shock waves across global markets.

The shares of Citigroup, which is the second largest U.S. bank by assets, have fallen 78 per cent this year, which had shaken market confidence. However, Citigroup shares rose in pre-market trading in the U.S. on a report that long-time shareholder of Citigroup, Saudi Prince Alwaleed bin Talal, plans to increase his stake in the bank to five per cent from less than four per cent. He had pumped in funds to the bank at the beginning of the credit crisis also to instil investor confidence.

The MSCI world equity index fell 2.3 per cent to 197.90, lowest since May 2003. Asian markets hit badly after the report that Japan’s exports to Asia fell for the first time in six years: Japan’s Nikkei closed down by 570.18 points at 7703.04 and Hong Kong’s Hang Seng lost 517.24 points at 12298.60.

The MSCI emerging equities index dropped 4.55 per cent to 467.32. Russian stocks on the MICEX exchange fell 7.5 per cent before trading was suspended for an hour. European stocks also hit badly as the FTSEurofirst 300 index of leading European shares dropped 3 per cent. Other French (CAC 40) and German (DAX) markets also closed lower. Hit with low global demand, oil fell below $ 50 a barrel (Brent crude quoted at $48.80 per barrel). The dollar dropped 0.77 per cent to 95.20 against the safe-haven yen, but edged up against the euro to 1.2504.

Indian bourses

In a highly volatile trading, which witnessed more than five per cent drop in early trades, the Indian stocks dipped by 322.77 points or 3.68 per cent to close at 8451.01, it is the lowest in three years.

This was a reflection of the fall in Asian and other global markets. Realty sector led the fall with a loss of 8.30 per cent, followed by consumer durables (4.95 per cent), oil and gas (4.64 per cent), banking (4.32 per cent), metal (4.18 per cent) and automobile (4.14 per cent).

The BSE 30-share index (Sensex) touched an intra-day low of 8316.39. However, a fall in inflation to 8.90 per cent for the week ended November 8 lifted the Sensex from a major slump. It had recoded a close at 8308.93 on November 10, 2005. The broader 50-share Nifty of the National Stock Exchange also tumbled by 81.85 points or 3.11 per cent to close at 2553.15 from its last close.

The Indian rupee on Thursday ended at yet another record low of 50.20/21 against the dollar, down by 18 paise as compared to its previous close.

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