| World stock markets down { January 28 2003 } Original Source Link: (May no longer be active) http://news.bbc.co.uk/2/hi/business/2697291.stmhttp://news.bbc.co.uk/2/hi/business/2697291.stm
Tuesday, 28 January, 2003, 00:16 GMT World stock markets down sharply
US shares have tumbled for the seventh time in eight sessions, as fears over a war with Iraq continued to haunt investors. The Dow Jones Industrial average dipped below 8,000 for the first time in three months.
Iinvestors continued to unload shares after a speech by chief UN weapons inspector Hans Blix to the UN Security Council failed to calm war jitters.
The Dow closed down 141 points, or 1.7%, at 7,990, while the technology-driven Nasdaq fell 17 points, or 1.3%, to 1,325.
Peter Cardillo, chief strategist at Global Partners Securities, said: "It's the war. The Blix speech at the United Nations actually fortifies the US administration's position. He was more critical (of Iraq) than the market may have been anticipating."
Some analysts were downright pessimistic.
"The public at large is shunning equities. This is traditionally the time when money comes into equities, into retirement accounts. So, this is disturbing," said Stephen Massocca, president of Pacific Growth Equities.
"People are concerned about Iraq, but I think there is a deeper concern about the state of the economy, the state of the markets. There is a kind of bear market malaise."
Oil prices fall
Although global stock markets were all anticipating a war, the oil market took a different view.
In London, Brent crude fell 2%, to settle at $29.86 a barrel, while US crude fell 99 cents to settle at $32.29 a barrel.
"There's no sign inspectors' work will shut down any time soon and the market sees this as delaying any attack, as to when is the big question," said a NYMEX floor trader.
Global gloom
Wall Street's poor performance compounded a day of gloom on European stock markets, with key indexes in London, Paris and Frankfurt all moving substantially lower.
In London, the FTSE 100 index closed 123 points, or 3.4%, lower at 3,481.
The index has now chalked up an 11-day losing streak, the longest in its history, and is at its lowest close since October 1995.
Some of the biggest fallers were insurers Royal & Sun Alliance, Aviva and Prudential - they each fell by 7-8% on worries they might have to sell more of the shares they own in order to maintain solvency requirements.
The falls have been blamed on worries over a possible war with Iraq and jitters over the outlook for the UK economy and company profits.
At one point on Monday, the FTSE 100 touched the level - 3,465 points - at which it was half the level of the all-time high reached in December 1999.
Crucial week
Analysts said the coming week could be vital in determining the timing of any action against Iraq.
UN weapons inspectors were reporting on Monday to the Security Council on their efforts in Iraq, while US President George W. Bush delivers his State of the Union address on Tuesday.
Market experts said uncertainty was one of the key factors unsettling investors.
"The effect of fear, uncertainty and shattered confidence hold the market in a vice-like grip of despair," said David Buik of spread betting firm Cantor.
Sir Howard Davies, boss of the UK's financial regulator, said the past year had seen "some of the most difficult conditions experienced in financial markets in living memory".
Tom Carpenter, chief economist at Chevy Chase Trust said he expected stock markets to rally after any Iraq war.
"Prior to the initiation of hostilities we could have very weak global stock markets, but once the war is launched and as soon as there is credible evidence that the war will be short and casualties low, I expect big drops in oil prices, and gold prices, a strengthening US dollar and a rally in the stock market, in the contect of tax cuts and low interest rates."
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