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Global stock markets plummet overnight

Global stocks continued to tumble overnight following a disastrous day on Wall Street yesterday – with world markets wiping €1.75 trillion off global stocks.

Currency traders work in Seoul, South Korea, Tuesday, Aug. 9, 2011.
Currency traders work in Seoul, South Korea, Tuesday, Aug. 9, 2011.
Image: Ahn Young-joon/AP/Press Association Images

GLOBAL STOCK MARKETS have plummeted further overnight following a disastrous day on Monday, with the Asian markets taking a particularly heavy battering in the wake of the Unites States’ credit rating downgrade.

The European Central Bank’s pledge to buy EU bonds, in an attempt to alleviate the growing eurozone financial crisis, succeeded in relieving pressure on Spain and Italy, however Wall Street suffered one of the worst days in its history.

The Dow Jones dropped 632 points and the Nadaq closed at 7 per cent, while Japan’s Nikkei average fell more than 4 per cent, Australian markets dived 4.5 per cent, Hong Kong’s Hang Seng was down 7.3 per cent and South Korea’s KOSPI fell 8.4 per cent, reports the Irish Times.

The price of oil also fell overnight, while gold prices rose to a new high, RTÉ reports.

A speech by US President Barack Obama, in which he claimed the US “would always be a AAA country” regardless of ratings agencies’ assessments, appears to have done little to soothe inverstors’ fears – with world markets wiping €1.75 trillion off global stocks yesterday.

The Minister for Finance Michael Noonan has admitted that the government is concerned about the possibility of a double-dip recession in the US and the effect that it would have on Ireland, particularly on Irish exports, the Irish Times reports. “We are always a small player in these events and we can be dragged back down by external forces,” he said.

The Wall Street Journal says the developments are a result of an overreaction to what everyone already knows – that huge debt is unsustainable – while the Financial Times questions how long the ECB’s pledge to buy bonds will stem the tide, pointing out that while Spanish and Italian markets stablised yesterday, Irish and Portuguese yields did not move from the 10 per cent mark (free subscription required).

Read: US markets continue nosedive as investors dump shares for bonds >

Read: Obama says US will “always be a AAA country” no matter what agencies say >

Read: Downgraded: US loses AAA credit rating for the first time ever >

Explainer: Why are the markets in chaos, and should you be worried ? >

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