News 2 Use: Global shockwave hits stock market

  • AFTERSHOCKS from more than $US20 billion ($A22.70 billion) in write-offs and losses announced by Citigroup extended the stock market’s losing streak into its eighth day – the longest downward slide since October 2000.
  • In the past eight trading days, the All Ordinaries index has dropped 8 per cent on worries a US recession is just around the corner – with investors and superannuation funds losing about $119 billion.
  • But economists are still divided on whether the US will go into recession or if the US Federal Reserve can re-ignite the staggering economic giant.
  • However, all eyes will be on JP Morgan’s fourth-quarter results overnight and Merrill Lynch’s announcement later this week for any further unexpected losses.
  • Most analysts have already factored in heavy losses at Merrill Lynch.
  • But bigger than expected losses could spark a further selldown as investors are worried the fallout from the sub-prime crisis might still have a long way to go.
  • After reporting its massive losses, Citigroup forecast the US housing market and economic slump will get worse.
  • However, former Fed Reserve chairman Alan Greenspan now rates a recession as a 50 per cent chance.
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