Tuesday, March 03, 2009

The next leg down for world markets

John Authers, of FT.com's "Short View" column, charts the new lows in world stock markets and emerging market currencies in this March 2 video clip.

Here's a lead in from the print version of, "The next leg down":

"World markets are taking the long-dreaded “next leg down”. A new low for this crisis by the S&P 500 last week has been followed swiftly by new lows for the FTSE-100, the FTSE- Eurofirst 300 and, in dollar terms, Japan’s Nikkei 225.

The equity markets’ loss of confidence has translated into currencies. The Korean won and the Mexican peso, representing economies exposed to US imports, are at fresh lows for the crisis. With currencies in eastern Europe, the current focus of concern, also falling, the risk of a true emerging markets crisis is back. "

Authers notes that some reasons for hope may be found in improved economic data from China (due to a recent uptick in activity coinciding with stimulus efforts there), but he remind us that we are now looking towards a command economy for signs of optimism.

Yesterday's new lows in the leading US stock indices (DJIA, S&P 500) brought us back down to price levels of 1997 and 1996, respectively.

We have now reached a point where the Dow has not only dropped 50 percent from its 2007 peak, we've also erased half of the rise in the DJIA from 1932 to 2007 in only 16 months, a fact Richard Russell and Michael Santoli recently pointed out.

Related articles and posts:

1. Back to the future: Stocks' fall may be a milestone - MarketWatch.

2. Four bad bears (updated chart) - Bear Mountain Bull.

3. Stock market roundup: Nowhere to hide - Investment Postcards.