US And European Stocks Continue Downwards

Stock markets in the US have reverted back to red, continuing last week’s downward trend after continued mortgage sector problems.

The ongoing sub-prime lending saga is continuing to suppress trading on markets, and indeed markets worldwide, despite intervention in financial markets by the Federal Reserve over the beginning of this week.

The Federal Reserve three-part cash pledge to rescue the industry seemed to be well received on Monday as trading saw a rare upturn for a period amongst otherwise poor trading figures.

However, with more and more investors becoming anxious as to the state of worldwide credit availability, and the potential for a credit crunch in the near future, resulting in the widespread sell-offs.

Markets were further unsettled by moves in Europe and Japan to inject more capital into lenders, as the effects of the US sub-prime crisis continue to be felt on a global level.

By the middle of trade today, the Dow Jones in New York was down by 62 points after news from major retailers suggested sales could be hit hard.

The NASDAQ also lost half a point over the course of the morning, and coupled with negative trading on the Dow Jones has an adverse impact on markets across Europe.

In London, the FTSE had lost 18 points, while the DAX and CAC both saw significant drops.

Coupled with poor second quarter results, negative US trading caused a loss of a staggering 87.00 points on the CAC in Paris, whilst the DAX in Frankfurt experienced a 39.05 point fall in the first half of the day.

Analysts have forecast that continued problems in US lending could lead to a worldwide credit shortage, inevitably resulting in a global recession if the situation continues to have an effect on bank liquidity.

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