Markets set for further turbulence
Updated on 28 January 2008
The FTSE 100 has dived back into the red following overnight falls across Asia as market volatility continues around the world.
Stocks have endured a tumultuous past week, with revelations of one of the banking sector's biggest ever fraud cases at French group Société Générale, further knocking already fragile confidence.
Analyst speculation has suggested that the French bank's "rogue trader", who is estimated to have cost the group around £3.57 billion, may have even contributed to some of the market turmoil.
On Monday, persistent fears over a possible recession in America sent China's benchmark Shanghai Composite Index plunging by 7.2 per cent.
Meanwhile, Japan's benchmark Nikkei 225 stock index fell 2.6 per cent, while Hong Kong's Hang Seng Index was down by more than 4 per cent in response to Friday's 1.4 per cent fall on Wall Street.
By lunchtime, the FTSE was 115.5 points lower at 5753.5 - a decline of nearly 2 per cent.
It is thought that some of the declines seen in Asia came as investors fretted over the US Federal Reserve's decision on interest rates.
In a bid to calm markets and stave off recession, the Fed announced a surprise three quarters of a percentage point rates cut last Tuesday.
Many investors are hoping for a further decrease in US rates this week, possibly by another 0.5 per cent, although concerns are mounting that policymakers may hold off from another cut so soon.
But a busy week for economic news from the US this week will do nothing to calm market nerves.
Alongside the interest rate decision, President George W Bush is also set to make a State of the Union address on Tuesday, while Washington is expected to flesh out its recently announced financial stimulus package.
Fourth quarter growth numbers are also due out later and there is further news on the US's troubled housing market later, with new homes sales data.
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