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Global stocks in volatile trading Global stocks in volatile trading
(10 minutes later)
Global shares have seen mixed trading on Wednesday, with US housing and credit woes continuing to cast a shadow over stock markets.Global shares have seen mixed trading on Wednesday, with US housing and credit woes continuing to cast a shadow over stock markets.
US shares opened strongly, rebounding from Tuesday's heavy falls, with the Dow Jones index up 0.8% as investors looked to pick up bargains. US shares opened strongly, rebounding from Tuesday's heavy falls, with the Dow Jones index up 0.6% as investors looked to pick up bargains.
The UK's FTSE 100 index overcame early losses to rise 0.5% to 6,130 by early afternoon, but Germany's Dax lost 0.1%. The UK's FTSE 100 index was largely unchanged at 6,104 by mid-afternoon, but Germany's Dax lost 0.2%.
A warning that a credit squeeze would hurt bank profits added to worries.A warning that a credit squeeze would hurt bank profits added to worries.
Earlier on Tuesday, Japan's main Nikkei index had closed down 275 points, or 1.7%, at 16,013.Earlier on Tuesday, Japan's main Nikkei index had closed down 275 points, or 1.7%, at 16,013.
Rate cut hopeRate cut hope
The Dow Jones was up 92 points at 13,133.9 in early trade on Wednesday, having closed 280 points, or 2.1% down, on Tuesday. Meanwhile the Nasdaq added 0.84% to 2,521.8. The Dow Jones was up 81.9 points at 13,123.4 in early trade on Wednesday, having closed 280 points, or 2.1% down, on Tuesday. Meanwhile the Nasdaq added 0.73% to 2,518.99.
Analysts said that investors hoped that the summer volatility on global markets would be eased if, as many expect, the Federal Reserve cuts interest rates next month. Analysts said that investors hoped the volatility on global markets would be eased if, as many expect, the US Federal Reserve cuts interest rates next month.
The latest warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - was given by brokers at investment bank Merrill Lynch on Tuesday. "The market is a little oversold, and bargain hunters are coming into the equation," said Weeden & Co strategist, Steve Goldman.
It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems Analyst Shoji Yoshikoshi class="" href="/1/hi/business/6953779.stm">Market jitters and your wallet "The market is also getting closer to when the Fed will lower rates."
They downgraded their opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup. Tuesday's fall came after another warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - from investment bank Merrill Lynch.
The mood of global investors was further hit on Tuesday by released minutes of the most recent meeting of the Federal Reserve, which suggested a US interest rate cut might not be imminent. We need more momentum...in order to start reversing some of yesterday's awful losses Peter DixonAnalyst, Commerzbank class="" href="/1/hi/business/6953779.stm">Market jitters and your wallet
The minutes showed that while the committee's members realised that the problems in the financial markets might need a policy response, they did not act at the start of this month because they were keeping their focus on inflation. The bank downgraded its opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup.
"Everyone is scared," said Shoji Yoshikoshi, senior investment strategist at Mitsubishi Capital UFJ Securities. "We need more momentum I think in order to start reversing some of yesterday's awful losses," said Commerzbank economist, Peter Dixon.
"It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems."
The sub-prime mortgage sector gives higher risk loans to people with poor credit histories.The sub-prime mortgage sector gives higher risk loans to people with poor credit histories.
Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates.Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates.
This has raised fears that this could hamper credit availability in the broader market, not just in America, but around the world.This has raised fears that this could hamper credit availability in the broader market, not just in America, but around the world.