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Saturday, Aug. 22, 1998
Global markets hurt by worldwide woes
Associated Press
From Hong Kong to New York, global stock markets Friday were roiled by investors skittish about economic woes in countries as varied as Russia and Venezuela. Unease about U.S. strikes on suspected terrorist targets in Afghanistan and Sudan also took its toll.
In Brazil, trading was temporarily halted on the Sao Paulo Stock Exchange, South America's largest, after its key index tumbled 10 percent, automatically suspending trading for the first time this year. Stocks made up some of their losses, and the index ended the day off 2.9 percent.
Traders said Brazil was being punished for investor jitters over Russia's financial crisis, a possible currency devaluation in Venezuela and weakness in other equity markets. Also spurring the selloff: Wall Street's sharp decline, with the Dow Jones industrial average plummeting 283 points, then rebounding to close with a loss of 77.76 at 8,533.65.
``There's no critical factor in Brazil causing this panic,'' said one Sao Paulo trader. ``It's all pressure from abroad.''
In Venezuela, government officials insisted there were no plans to devalue the currency. But the central bank said it will allow the bolivar to trade more freely within an established band, without trying to keep it at the midpoint of the trading range.
``As we have made clear, we are not studying a devaluation or exchange controls,'' said Finance Minister Maritza Izaguirre.
That did little to ease investors' fears. The Caracas stock exchange fell 8.4 percent, following a 9.5 percent plunge Thursday.
Traders estimated the Central Bank sold about $150 million Friday to prop up the bolivar, which closed at 575.50 per dollar, down from 574.50 a day earlier.
Mexico's currency, the peso, plunged to an all-time low against the dollar. The peso closed at a mid-rate of 9.74 per dollar, off 9.345 a day earlier.
``You'd have to call it a panic,'' said Eduardo Estrada Lopez, economist at Grupo Financiero Bancomer.
The Mexican Stock Exchange's key IPC index was down 3.2 percent.
Treasury Secretary Jose Angel Gurria described the market's fall as a reaction to economic slides elsewhere.
``This has nothing to do with internal factors,'' he said, according to the government news agency Notimex.
In Russia, the main stock index continued its downward spiral, skidding 5.6 percent. The government, struggling to repair the ailing economy, effectively devalued its currency on Monday, sending shudders throughout emerging markets.
Prices also plunged on Europe's biggest stock markets.
Frankfurt's blue chips took the biggest hits -- finishing down 5.4 percent after being off as much as 6 percent -- on concerns that Russia's economic troubles could prove painful to German banks.
The London and Paris markets lost more than 3 percent each, with red ink spreading wildly through smaller bourses across Europe.
``The uncertainty is adding up,'' said Regis Khaber, an analyst at the Aurel brokerage in Paris.
Asian markets also were sharply lower, with the key index in Malaysia plunging nearly 8 percent as investors took profits following sharp gains in the past two days.
Share prices also tumbled in Hong Kong on profit-taking from Thursday's gains.
The Hang Seng Index, the Hong Kong market's main indicator of blue chips, fell 2.8 percent.
In Tokyo, share prices fell as Japan's third-largest corporate failure -- trading firm Okura and Co. -- this year raised fears about the health of the economy.
The benchmark 225-issue Nikkei Stock Average shed 93.21 points, or 0.61 percent, to close at 15,298.20.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web