Stock exchanges sinking

Since this morning bad news kept pooring in. U.S. stocks decline for a fifth session straight, prolongating a sharp sell-off that has the major indexes trading at or near four-year lows. Today all the US major share indexes plunged 5% more, showing that the markets do not trust the US government’s measures and that the investors are rellocating their money somewhere else.
In the emerging markets things are even worse. The Moscow stock-exchange was closed 35 minutes after opening, uncapable to sustain the wave of sales prepared for the beginning of the trading. In Bucharest and in some other Eastern Europe countries, the stock exchanges halted shortly after booting the computers, due to a big wave of panic selling.

Japan’s Nikkei has also plunged already 8%, whilst the news that UK will inject 45 billion pounds into the country’s banking system to save it has sent FTSE. All in all the Asian markets, traditionally perceived as being much more volatile than their US or European counterparts, have decreased to 5 year lows (Japan’s to 11 year low), with South Korea’s Hang Seng leading the pack at -8,64%.

The currencies are also under pressure, with dollar decerasing further two weeks in a row. This is regarded by analysts as a response to the further cuts in the interest rates undertaken globally today by most of the major economies, except for Japan (which has an interest rate of 0,5% only but which welcomed the measures taken by other industrialised nations).

The dollar dropped 0.9 percent to $1.3706 per euro at 8:08 a.m. in New York, from $1.3588 yesterday. The U.S. currency fell 0.7 percent to 100.78 yen, from 101.47. The euro increased 0.2 percent to 138.08 yen, from 137.89.

Central banks around the world cut interest rates in unison on Wednesday in a joint response to the global financial crisis, giving a boost to battered stock markets.

The Fed said it was cutting its key federal funds rate by 50 basis points to 1.5 percent. China, the European Central Bank (ECB) and central banks in Britain, Canada, Sweden and Switzerland also cut rates in the coordinated response which analysts had been demanding.

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