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Panic returns as stocks plunge- Latest Market Analysis

Equity markets were under pressure once again this morning, as news was released that the ECB had lent dollars to an unnamed Eurozone bank, a scenario not seen since February of this year. The $500m one week loan indicated distress in at least one of the regions beleaguered financial institutions, once again leading to comparisons (whether accurate or not) to the post-Lehmans credit crisis.

Pre market also saw the release of UK retail sales, demonstrating that sales volumes excluding petrol rose just 0.2% in July, below forecast of 0.3%. Food showed an increase of 0.7%, but clothing and household goods brought the overall average down.

The global growth worries hurt mining and auto companies, although the banks suffered the worst of the sell-offs, with Barclays and Royal Bank of Scotland both over 11% lower.

The afternoon saw yet more selling on US data that suggested weekly jobless claims climbed to 408,000 against expectation of 400,000. Consumer price inflation also disappointed with a 0.5% monthly increase, largely a result of gasoline prices. Fragile stocks markets plummeted on the news.

With markets already a deep shade of red, bears were given yet more ammunition as US home sales dropped 3.5% last month to an adjusted annual rate of 4.67milloin. The figure is well below the 6 million that must be sold to sustain a healthy housing market, with falling home prices keeping many sellers off the market. A concurrent announcement gauging the manufacturing activity in the Mid-Atlantic region showed a fall to levels not seen March of 2009. The Philadelphia Fed activity index dropped to -30.7, from +3.2 in the previous month, the biggest month on month drop since October 2008. Markets fell further with the FTSE 100 eventually ending the day 4.5% lower with a 240 point decline to 5092, just 80 points higher than the recent lows seen last week. The CAC 40 was lower by 5.5% with German DAX down almost 350 points (5.8%) at the European close.

In a disastrous day for equity investors, it is unsurprising that assets traditionally seen as safe havens saw money diverted their way. Gold continued its meteoric rise, another 2% higher at $1820.

This was posted in Bdaily's Members' News section by John Dance .