Anthrax attacks pull down global markets

Sensex too down by about 63 points

EEB & REUTERS

MUMBAI/LONDON, OCTOBER 18: GLOBAL stock markets struggled on Thursday as concerns over the impact of anthrax attacks on the weakening US economy left investors seeking sanctuary in government bonds, gold and Swiss franc. While most of the world markets fell by 2 to 4 per cent, the benchmark Sensex lost 63 points, or 2.05 points as Indian markets too joined the global sell-off over germ war fears.

With more Anthrax attacks surfacing, European share benchmarks tumbled with the FTSE Eurotop 300 dropping over 2.0 per cent and the DJ Euro Stoxx 50 by 2.4 per cent, more than wiping out the previous session’s gains and amid profit warnings from technology leaders German SAP and Anglo-Dutch CMG.

Asian stock markets on Thursday buckled under Wall Street’s fall as key US officials signalled a recession was imminent in the world’s biggest economy and the anthrax scare there widened. Shares on Asia’s biggest bourse, Tokyo, slumped 2.61 per cent or 280.60 points to 10.474.85 at the close, as tech stocks stumbled along with their US counterparts on the Nasdaq. Stock markets in Hong Kong, Singapore and Seoul also caved in under pressure from Wall Street.

The benchmark Hang Seng Index in Hong Kong fell 3.81 per cent to 9,869.94 points by the midday break. Singapore’s Straits Times Index dropped 1.77 per cent or 25.53 points to 1,416.54. The Korea Composite Stock Price Index (KOSPI) ended down 4.08 points, or 0.77 per cent, to end at 524.21.

In India, Sensex opened weak at 3023.29 and later moved downwards to the intra-day low at 2967.68 before closing at 2981.33 as against yesterday’s close of 3043.85, a net loss of 62.52 points. The broad-based BSE-100 Index also dipped by 28.96 points to 1377.82 from previous close of 1406.78. Technology stocks which were in the forefront of the bull rally in the past few days, felt the heat right from the beginning of session.

“The markets are overreacting in both directions. With such little visibility you tend to get extreme responses to even the smallest items of news,” said HSBC European equity strategist Sharon Coombs. The Swiss franc was one of the few bright spots with so mere-emergence of safe-haven buying after Wednesday’s closure of the US. Congress because spores of anthrax bacteria had been found there and on rumours of other incidents which could suggest germ warfare.

US bombing of Afghanistan continued in retaliation for the September 11 attacks on New York and Washington and comments from US officials suggesting the economy was heading for recession dealt another blow to global confidence.

Earlier, the technology-laced Nasdaq Composite Index dropped 75.71 points, or 4.4 percent, to 1,646.36. The Standard & Poor’s 500 fell 20.45 points, or 1.86 percent, to 1,077.09. The Dow Jones Industrial Average fell 1.61 percent or151.26 points to 9,232.97. Gold, another refuge in times of uncertainty, was also firmer at $283.25/284.00 a troy ounce, up more than a dollar from Wednesday’s close in New York.

German Finance Minister Hans Eichel said the German economy, the largest in Europe, was likely to grow by only around 0.75 per cent this year and by between 1.0 to 1.5 per cent in 2002.