Markets in meltdown amid new global recession fears
Frenzied selling wipes £62bn off value of FTSE and Dow Jones plummets in another tumultuous day for world economy
By Heather Stewart
Financial markets on both sides of the Atlantic were convulsed by a fresh wave of selling amid fears that the world economy is sliding back towards recession.
The FTSE 100 closed down 239 points, or 4.5%, at 5092, wiping more than £62bn off its value. By late afternoon on Wall Street, the Dow Joneswas down by 480 points, or 4.2%.
Growing disarray in the eurozone over the latest bailout for Greece, weak American manufacturing figures and a warning from Wall Street bank Morgan Stanley that the US and Europe are “hovering dangerously close to recession” all contributed to the mood of panic.
A closely watched gauge of the US manufacturing sector produced by the Philadelphia Federal Reserve plunged, underlining fears that the recovery has ground to a halt.
The yield on benchmark 10-year US Treasury bonds, which measures the cost of borrowing for the American government, slipped below 2%, as investors sought a haven from the storm. Gold, which has soared in value this year, hit another new record of $1,825 (£1,106) an ounce.
Sal Catrini, managing director for equities at Cantor Fitzgerald in New York, said: “The market is in meltdown mode; the data continues to stink. I don’t know that there’s much more to be said.”