Markets Tumble On Greenspan'S Statement
In London, the FTSE index dropped 150 points by noon yesterday after brokers went on a selling spree, triggered by fears that the US market will nosedive.
The impact of government's statement was felt as soon as Tokyo and Hong Kong opened yesterday. In Europe, Paris, Frankfurt and London all dropped from record levels.
European debt markets were also down yesterday and the dollar dropped against the mark and the yen.
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Greenspan's remarks late on Thursday night were interpreted as a warning to financial markets that interest rates may be hiked in the near future.
Most dealers in Europe expect the Dow Jones Index to fall by about 100 points.
The first panicky reactions to Greenspan's statement came from Japan where the Nikkei Index dropped nearly 700 points in frenzied trading yesterday. The drop was the biggest in nearly a year-and-a-half.
In Frankfurt, it was the same story as the DAX Index fell nearly 4.38 per cent after hitting a record high of 2,909 only yesterday. In Paris, the market dropped 4.51 per cent.
The only gainer yesterday has been gold, which staged a rally after a long time. Gold was up $3 to $373 from Thursday. Last Tuesday, gold had touched a 1996 low of $366.