World markets on roller-coaster ride amid concerted rate cuts


New York : A concerted rate-cutting move by the central banks of the world’s economic heavyweights appeared Wednesday to be meet with a positive, if tentative, response on European exchanges and early gains on Wall Street. But markets and investors were still obviously on a roller coaster ride much of the time.

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The central banks of the US, Britain, Canada, Switzerland, Sweden and China, as well as the European Central Bank, delivered a 50 basis points cut in their lead rates in a bid to ease monetary conditions and shore up market liquidity.

The move came too late to affect markets in Asia, which saw further massive losses in the wake of Wall Street’s drop of five per cent, with for example, Japan’s leading Nikkei plunging 952.58 points, or 9.38 percent, to end at 9,203.32.

But a half hour into the new Wall Street session Wednesday, the Dow Jones index had gained almost 105 points, or 1.1 percent, to reach 9,552 points.

In Europe, stocks began plunging in the wake of Wall Street’s losses Tuesday and the early losses in Asia, but then the rate cut announcement triggered encouraging rebounds on a number of exchanges.

In London, the FTSE 100 Index started out with a 7 percent plunge, only then to rebound after the rate cut announcement. By lunchtime, the index was up almost 39 points to 4,644 points.

In Paris, the benchmark CAC 40 was on a similar roller-coaster ride. Trading was briefly suspended in the morning when a rush of sell orders sent the index plunging more than 8 percent. But after the rate cut announcement, shares rebounded strongly – only for a new pessimism to set in. At mid-afternoon, the CAC 40 was down 4.7 per cent to 3,557.33 points.

In Frankfurt, German stocks rallied slightly Wednesday after the interest rate cuts. As of mid-afteroon, the 30-share DAX was running at 5,256 points, down 1.3 percent from Tuesday’s close – but more than 300 points higher after the DAX had initially plunged 8.6 per cent to around 4,900 points.

In Amsterdam, the AEX at mid-afternoon was at 296.15 points. While this was down 4.3 percent from Tuesday’s close, it was well above the early-session five-year low of 280.52 points.

In Madrid, the Ibex-35 was down by 3.1 percent at 10,535 points at mid-afternoon. But Miguel Blesa, president of the Caja Madrid savings bank, said he expected the rate cuts by central banks to “take effect” as soon as investors recovered confidence in the markets.

In Italy, the Milan Bourse was volatile, first plunging 7 percent to drop to a five-year low, only then to recover slightly on the rate cut announcement. At mid-afternoon, the benchmark S&P/Mib index was down about 4.1 percent at 22,658 points.

In Warsaw, the main WIG20 index was down 1.83 percent to 2,146 points at mid-afternoon. But this was an improvement after the index had initially plunged by over 4.1 percent.

In Vienna, the ATX index was off 8.5 percent at mid-afternoon, with more than half the shares losing over 10 percent. But the head of Austria’s chamber of commerce Christoph Leitl welcomed the lower interest rates. “Companies urgently need low-priced money for future investments,” he said.

In Stockholm, the OMXS Stockholm 30 benchmark index was down 3.3 percent in mid-afternoon. The Copenhagen, the OMX Copenhagen 20 Index was down 4.2 percent while in Helsinki the decline was 1.8 per cent. In Oslo, the main index was down 2.6 percent with declines for energy group Statoil Hydro and telecommunications group Telenor.

In Prague, the main PX index closed down almost 3.9 percent at 1,042.6 points, but the figure represented a recovery from much lower readings in the morning trading before the market responded to the rate cut announcement.

In the Baltics region, stock markets were in a contrary mood Wednesday. All three indexes were down, with Tallinn losing 6.80 per cent, Riga 6.05 percent and Vilnius shedding a whopping 8.19 per cent. The guideline Baltic Benchmark Index (BBI), which includes data from all three exchanges, plunged 8.44 percent to close at 311.18.

In the Mideast, Arab stock markets dived for the fourth day in a row. However, two of the major regional markets, the Saudi and Kuwaiti stock exchanges, trimmed their losses at a later stage apparently in response to local and global steps taken to stem the turmoil.

The Tadawul All Share Index (TASI) of the Saudi stock exchange, the Arab world’s largest bourse, opened at a loss of about 8 percent but closed at a decline of 1.5 percent. Kuwait’s all-share price index opened at a loss of more than 3 percent but closed at 1.41 per cent in the red.