Fresh Turmoil in Equity Markets
Krishna Guha, Michael Mackenzie and Gillian Tett write in Financial Times:
Equity markets fluctuated violently on Friday – with London and continental Europe experiencing their worst one-day falls in four years and Japan tumbling sharply – as the US Federal Reserve and other central banks scrambled to avert a liquidity crunch.
Across markets, investors tried to rein in their exposure to risky and illiquid assets.
The FTSE 100 suffered its worst fall for more than four years, falling 3.7 per cent to 6,038.3 – and wiping £63bn off the value of the index. The FTSE 100 has been the only leading stock index so far to officially “correct” – having fallen more than 10 per cent from its June peak.
…The Fed promised to provide whatever funding was needed to ensure that banks were able to continue lending to each other at its desired interest rate of 5.25 per cent and pumped $38bn (£18.8bn) into the system in three separate open market operations.