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Economy woes batter global equities Jeremy Gaunt Persistent fears about the world economy battered global stocks again on Monday and drove investors towards safer assets despite expectations of more interest cuts from the Federal Reserve to bolster growth. Equity markets in Europe and Asia fell sharply with the pan-European FTSEurofirst 300 down around 2 percent, taking January's losses alone to more than 13 percent. Japan's Nikkei early dropped nearly 4 percent on worries that the U.S. economy was already dragging Japan's down into recession. Wall Street also looked set for a poor start with stock index futures pointing at sharp early losses.
"People remain pretty nervous. We haven't seen the full extent of the fall-out of subprime," said Jan Smedts, deputy head of equities for Dexia Group, referring to losses and turmoil in the U.S. mortgage sector. Monday's losses on equity markets came despite efforts last week by U.S. authorities to stop that country's economic downturn, which is exacerbated by subprime losses and credit market worries. It included an emergency 75 basis point Fed cut, a $150 billion fiscal stimulus plan from the White House and early discussions on how to bail out insurers whose underwriting of debt may yet trigger a new wave of losses. The Fed is also expected to cut interest rates again this week with interest rate futures showing the market betting on another 25 or 50 basis points in cuts, possibly taking rates as low as 3.0 percent.
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