Wall Street steadies after bruising

US shares recover slightly after plunge in one of the worst selloffs of 2007.

japan stock market — Chinese investors watch stock prices as shares fall, one day after record highs [AFP]

After a weak opening, the Dow Jones Industrial Average rose by 17.97 points (0.13 per cent) to 13,491.54 at 1415 GMT, a day after a 300-plus point drop for blue chips in the second worst session .

The tech-heavy Nasdaq composite advanced 5.44 points (0.21 per cent) to 2,604.78 while the broad-market Standard & Poor’s 500 index added 2.79 points (0.19 per cent) to 1,485.54.

Wall Street was still licking its wounds from Thursday’s savagery amid concern over rising borrowing costs, and also mulled over a report showing that the economy grew at a better-than-expected 3.4 per cent rate in the second quarter.

London’s prestigious FTSE 100 index gained a marginal 0.07 per cent to 6,255.30 points, after plunging by 3.15 per cent on Thursday – the heaviest daily loss since March 2003.

The market fell “on the back of concerns that the US subprime mortgage crisis could have a larger impact on other markets worldwide than previously thought,” said analysts at the Sucden brokerage in London.

The Tokyo stock market, the world’s second largest, plummeted 2.36 per cent to 17,283.81 points – which was the worst finish since May 1 for the benchmark Nikkei-225 index of leading shares.

Hong Kong’s key Hang Seng Index closed down 2.76 per cent at 22,570.41 points.

Caution

Japanese share prices also slumped following
Wall Street’s overnight plunge [AFP]

Hugh Johnson, chairman of Johnson Illington Advisors, said: “The aversion to risk is as strong this morning as it was yesterday.

“Most buyers are stepping back and just watching the market open.” Johnson said eventually buyers will “make their decisions on whether to step in and start to buy”.

Al Goldman at AG Edwards said, however, that the sharp selloff on Thursday was the result of “old news – credit problems, subprime loans, selected earnings disappointments and oil prices.”

Asian observation

Goldman said the market “was vulnerable for a correction after its big rally the past three weeks” and said he believed the recovery late in the session on Thursday “will pick up steam today”.

“Today, ideal action would be a sharp early down, test yesterday’s lows at Dow 13,330, hold, then rally. We look for an up session by the close,” he said.

Market players around Asia are carefully watching to see the extent o fthe knock-on effects of US troubles, said Kazuhiro Takahashi, head of the equity department at Daiwa Securities SMBC.

“They will take one month or so to make sure the problem isn’t hurting the global economy, which is largely expected to be solid towards next year,” Takahashi said.

“It is unlikely that the markets will rise back sharply after such a big drop,” he added.

Source: News Agencies