Market panic recedes as Wall Street recovers

A collective sigh of relief swept across global trading floors on Tuesday as bargain hunters swooped on Wall Street stocks, stemming a haemorrhage that had been spreading panic among investors. With Asian and European equity markets plunging, New York stocks started their trading day with another jaw-dropping fall as the Dow index dived 2.7 per cent, adding to the previous day’s record-breaking loss. But within minutes a fierce battle seemed to be playing out between those betting on a further downturn and those who thought that the market correction had gone too far, leading to some wild price swings.

After a brief foray into positive territory, the Dow index stabilised at levels around one per cent lower. “Dow up! Panic over, as you were everyone,” tweeted James Hughes, chief market analyst at AxiTrader. Jasper Lawler, head of research at London Capital Group tweeted “Trader’s paradise out there right now”, in a reference to volatility which boosts brokers’ earnings. European stock markets were helped off the day’s worst levels by the Wall Street recovery, but remained deeply in the red. The sell-off began last Friday when bright US non-farm payrolls data sparked fears that inflation will surge this year — and that the Federal Reserve will be forced to raise borrowing costs more quickly than anticipated. — AFP