World Picture

Wall Street joined a global market rout on Friday that kicked off in Japan, led Russia to suspend trading and sent oil and other commodities tumbling on fears of a deep worldwide recession. The US stock indices fell around 4 per cent. News of a contraction in Britain’s economy fuelled fears of a worldwide recession stemming from the worst financial crisis in 80 years. China warned the outlook was grim. Foreign exchange markets saw extreme volatility with the yen rocketing to multi-year heights against the dollar and euro. The euro/yen rate fell 10 per cent at one point. Britain’s economy shrank 0.5 per cent in the third quarter, and analysts said euro zone figures showed the 15-nation currency bloc was already in recession. The pace of existing home sales in the US rose sharply in September, but a Reuters poll of economists suggested battered US home prices would decline next year and a possible recovery in 2010 would be meek at best. Stock markets went into a freefall around the world as panicked investors moved to liquidate risky positions. Japan’s Nikkei index ended down 9.6 per cent and European shares dropped 6.5 per cent. The Dow, the S&P 500, and the Nasdaq dropped around 4 per cent each. The price of US government bonds rose as investors exited stocks. “I would characterise this as a shell-shocked mentality out there,” said Thomas di Galoma, head of government bond trading at Jefferies & Co. in New York. “It’s all the deleveraging of equities ... It’s causing an issue for everyone.” Russia suspended trading on its stock market until at least Tuesday after the market lost more than a tenth of its value on Friday, hitting its lowest levels since late 2004. “The global financial crisis has been constantly spreading and worsening, creating a severe shock to global economic growth,” Chinese Premier Wen Jiabao said at a meeting of 27 member states of the European Union and 16 Asian nations.