Wednesday, September 17, 2008
Stock markets around the world, particularly those in the United States, have fallen dramatically today. This is due to the ongoing events in the financial world, including the bailout of large insurance firm AIG by the US Federal Reserve.
The primary UK index, the FTSE 100, dropped in value by 2.36%, which is 118.40 points, to below the 5000 mark at 4907.20. The Dow Jones was down 2.62% at 16:08 UTC, a slight increase from earlier today. The Dow Jones currently has a value of 10769.00 points. The Nasdaq index has fallen by 3.16% to 2138.14, while the Dax was 1.75% lower than the start of the day as of 16:08 UTC.
The Japanese index the Nikkei was one of the few to rise in value over the day. It ended up 1.2%, although this follows a large fall in the value of the index when it hit an all time low yesterday.
Darren Winder, a market analyst from Cazenove, said that “I don’t think anyone has got any or much confidence in market direction for more than a few days.”
A lot of today’s activities in the market were related to the takeover of the American International Group (AIG) on Tuesday in an US$ 85 billion loan, in exchange for a 79.9% stake in the company.
The fact that AIG has thousands of divisions engaged in business across the globe sets them apart from the recent problems with other banks. AIG was built up over the last several years via the buyouts and mergers of many companies around the world, offering AIG’s stockholders a diverse base of income which allowed it to steadily increase profits.
In addition, the markets have also had difficulties during the past week after the refusal of the Federal Reserve to bail out Lehman Brothers, forcing the company to file for bankruptcy on Monday after Bank of America (BoA) and Barclays PLC pulled out of negotiations over the weekend.