Stock Markets Take New Tumble

September 18, 2002

World stock markets have suffered another sharp knock as a string of poor results and the ongoing threat of war took their toll.

Companies on both sides of the Atlantic painted a gloomy picture, with bad news from US software firm Oracle and financial group JP Morgan Chase reverberating across banking and telecom stocks in Europe.

In Frankfurt, the Dax index of leading shares fell back to five year lows, while London's FTSE 100 index slid below the crucial 4,000 level, closing down almost 160 points at 3,865.

Analysts warned that there could be more bad news to come and that investor confidence had some way to go before a sustained recovery could be enjoyed.

Worse than the dentist

It's like going to the dentist for root canal treatment - you hope it can be sorted in one sitting but you keep having to endure more pain every few months - Stuart Fraser, Standard Life Investments

The bad news was sparked by warnings of weaker revenues from JP Morgan Chase, the second largest US bank, which said bad loans and subdued trading results would hit third-quarter earnings.

The news sent the companies own shares down 9.5% to $19.50 and also affected the banking sector as a whole.

In the UK, Barclays was closed down 8.2% at 403 pence, while the Dutch group ABN Amro fell 7.2%.

Other companies reporting tough conditions included software group Oracle and sports group Nike.

Analysts said the run of bad news had knocked any earlier hints of a possible rally and prompted suggestions that the US recovery would be slower than hoped .

Stuart Fraser, head of European equities at Standard Life Investments, said: "It's like going to the dentist for root canal treatment - you hope it can be sorted in one sitting but you keep having to endure more pain every few months".

Shadow of war threat

As well as the disappointing company news, analysts said the possibility of an attack on Iraq was still preying on investors' mind.

Despite president Saddam Hussein's concession to re-admit U.N weapons inspectors, the US has said it still wants to pass a resolution backing tough action against Iraq.

"The risk of war is a heavy risk, which still weighs on the market," said Francois Garnier, manager of HMG Euro-Opportunite.

http://news.bbc.co.uk/2/hi/business/2265786.stm