Global stock markets extended their slide for a second day yesterday, plunging amid fears that a possible US recession will cause a worldwide economic slowdown.
The dramatic declines in Asia and Europe spread to Wall Street, where stock index futures were already down sharply hours before the trading day began.
US stocks tumbled the most since September 2002 after the Federal Reserve's interest-rate cut failed to persuade investors the economy will avert a recession.
The declines following Monday's holiday added to a sell-off across Europe and Asia that has erased US$7.3 trillion in global stock-market value this year. Exxon Mobil Corp, the largest oil company, and Barrick Gold Corp, the biggest gold producer, fell on lower crude and metal prices. Bank of America Corp posted its steepest decline since 2003 after the second-largest US bank said earnings dropped 95 percent.
The S&P 500 retreated for a fifth-straight day, dropping 50.42, or 3.8 percent, to 1,274.77 at 9:36am in New York. The Dow Jones Industrial Average decreased 429.86, or 3.6 percent, to 11,669.44. The Nasdaq Composite Index lost 103, or 4.4 percent, to 2,237.02. About 43 stocks fell for every one that rose on the New York Stock Exchange.
Before trading opened yesterday, the US Federal Reserve had responded to declining sentiment by cutting its target for the federal funds rate by 75 basis points to 3.5 percent.
"The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth," it said.
In Taiwan, share prices closed 6.51 percent down yesterday, with the weighted index falling 528.24 points to 7,581.96.
Stocks traded in a range between 7,566.75 and 7,741.99 points on turnover of NT$134.53 billion (US$4.1 billion).
Japan's Nikkei 225 index nose-dived 5.7 percent -- its biggest percentage drop in nearly 10 years -- to 12,573.05, a day after falling 3.9 percent. Australia's benchmark index sank 7.1 percent, its steepest one-day slide in nearly 20 years.
Hong Kong's Hang Seng index, which slumped 5.5 percent on Monday, finished down 8.7 percent. In China, the Shanghai Composite index lost 7.2 percent to 4,559.75, its lowest close since August.
Indian Finance Minister P. Chidambaram urged investors to remain calm after trading in Mumbai was halted for an hour when the stock market fell 10 percent within minutes of opening. By the close, the Sensex regained some ground to close down 4.6 percent.
European markets had their biggest one-day falls since the Sept. 11 attacks and were volatile yesterday. By mid-morning the UK's FTSE 100 had slipped 1 percent, Germany's DAX dropped 2.9 percent and France's CAC 40 slid 1.1 percent.
Investors dumped shares over the last two days on worries that the US economy, battered by a credit and housing crisis, will shrink in coming months, weakening demand for exports.
Dealers said US President George W. Bush's announcement on Friday for US$140 billion in temporary tax cuts and other measures to ward off a recession in the US was not good enough.
French Finance Minister Christine Lagarde said yesterday that Bush must do more.
Adding to the gloom, billionaire investor George Soros said the world was facing the worst financial crisis since World War II and the US was threatened with recession.
In Asia, stocks tumbled the most since September 2001, extending a global slump that has wiped more than US$5 trillion from stock markets this year on concern world economic growth is faltering.
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