Global Stock Markets Sag On U.S. Recession Worries

by Darren

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It’s not hard to see what an impact the U.S. economy has on the rest of world. If people are expecting a recession in the United States, it could mean a slowdown in most other markets of the world. The Asian and European stock markets have tanked on just such worries.

India’s benchmark stock index tumbled 7.4 percent, while Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy, which has been battered by housing and credit problems. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending

The basic sentiment is that the proposed “bailout” of the U.S. economy by President George Bush will not do enough to restore the sagging fortunes of the world’s largest economy.

“It’s another horrible day,” said Francis Lun, a general manager at Fulbright Securities in Hong Kong. “Today it’s because of disappointment that the U.S. stimulus (package) is too little, too late and investors feel it won’t help the economy recover.”

Negative investor sentiment almost always pushes shares down, and when the entire environment is this pessimistic, it’s hard to believe anyone is expecting an up week for most issues.

Gloomy news for the U.S. stock market now means sad days for exchanges in Mumbai, Tokyo, and Hong Kong. We should all be able to measure investor sentiment better in the coming weeks as more economic news emerges.

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