News / USA

Global Stocks Tumble on Weak Euro


Financial markets around the world tumbled Monday as fresh worries over debt in Europe dampened confidence in a global economic recovery.  In the US, all three major indexes fell more than 1 percent in early trading before recouping losses as the markets closed. Analysts say volatility continues to spook investors and dampens confidence in the euro, which fell to a four-year low against the U.S. dollar.

Investor sentiment continues to sour over concerns that European countries are not doing enough to tackle their national debt.  

Key benchmarks in China and Hong Kong fell sharply on Monday.  

Francis Lun at Fulbright Securities says  Asian markets still haven't recovered from last week's slump. "Last week European markets fell sharply by three to four percent and that created a domino effect in global equity markets.  The Dow Jones lost 162 points and this morning (May 17) Asian markets generally fell about two percent."

It was a similar story in India. Bombay's Sensex index fell to its lowest level in two and a half months.

Market analyst Sunil Shah says that may be a sign of things to come. "The BSE Sensex, which is the bell weather index of the country, is down 425 points.  The simple reason is that there is this scenario prevailing now, what we witnessed in 2008 when Lehman Brothers went bust.  This could be far, far bigger than that," he said.

The worries stem from fears that fiscal problems in Greece could spread to other countries in Europe.

A week before announcing major spending cuts, British Finance Minister George Osborne said the debt problems in Greece serve as a warning. "Greece is a reminder of what happens when governments lack the willingness to act decisively and quickly," he said.

But many investors worry that austerity measures taken by Greece, Portugal and Spain will stifle growth in Europe and lead to recession.

Greek market analyst Constantinos Vergos says the risks are scaring away investors. "It is the recession fears but also the market is fearing that the problem that we have in Greece may continue also in other countries.  It's something that may affect the euro and the stability of the system overall," he said.

The 16-nation euro fell Monday to about a $1.22 before recovering near the $1.24 mark.

European trader Oliver Roth said, "I think what we now see is a profound crisis of faith in the euro."

Since May 1, Europe's common currency has dropped seven percent against the U.S. dollar.

Economists say a weaker euro could boost European exports, but make U.S. products more expensive.

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