Is the present financial crisis a global concern like the economy after the 9-11-2001 attacks?
*Financial Times, by Ed Crooks and Norma Cohen, October 8, 2008:
"Central banks around the world announced a co-ordinated cut in
interest rates on Wednesday, in response to mounting fears about the
impact of the financial crisis on the world economy.
The US Federal Reserve, the European Central Bank, the Bank of England,
and the central banks of Canada, Switzerland, Sweden and the United
Arab Emirates all cut their main lending rate by 0.5 percentage points.
The People’s Bank of China also announced a rate cut of 0.27 percentage
points. The Bank of Japan, which already has a main lending rate of 0.5
per cent, did not cut its rate, but expressed 'strong support' for the
other banks’ moves.
The Fed, ECB and Bank of England issued statements with identical
explanations for the move, saying inflationary pressures had started to
moderate, and the recent intensification of the financial crisis had
“augmented the downside risks to growth”.
The euro and sterling, which have fallen in recent weeks against the
dollar, gained following the announcement, while the yen, which is seen
as a reserve currency, lost ground.
Equities markets were off the day’s lows, helped by a higher open on
Wall Street for the first time in five sessions, but in Europe shares
remained in negative territory.
The S&P 500 was up 14.7 points or 1.5 per cent at 1,010.9 and the
Dow Jones Industrial Average rose 91 points or 1 per cent to 9,538.9.
The FTSE 100 fell 2.3 per cent or 105 points to 4,500.3, but more than
300 points above the day low. The Dax 30 in Frankfurt slumped 3.1 per
cent or 167 points to 5,159 and the CAC 40 in Paris was down 3 per cent
at 3,621.8.
Asian markets, which closed before the co-ordinated bail-out, suffered
heavy losses. The Nikkei 225 in Tokyo recorded its biggest one-day fall
since 1987 and the Hang Seng in Hong Kong had its heaviest fall since
1973.
Oil prices rebounded from early losses on hopes that a global recession
might be averted and government bond prices fell.
The co-ordinated central bank action, while highly unusual and a strong
signal of the authorities’ determination to act, is not unprecedented.
There was a roughly co-ordinated series of rate cuts around the world
following the terrorist attacks in New York in September 2001."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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