World shares tumbled Monday as the recession worsened in the U.S. and more bad international corporate news was released. In London, banking giant HSBC Holdings announced it was seeking to raise nearly $18 billion from investors and British Prime Minister Gordon Brown prepared for his meeting later this week with U.S. President Barack Obama at the White House.
As the negative news piled up, the downward pressure increased, forcing share prices lower.
The latest U.S. GDP figures from Friday drove the Asian markets down with the Tokyo and Hong Kong indices both losing nearly four percent.
Hours later, the same story played out in Europe where share prices headed down.
Financial stocks in particular were weaker lead by the banking giant HSBC that reported a nearly 70 percent drop in 2008 net profits. The institution also announced it was looking to raise just under $18 billion in new capital through a share issue.
HSBC chairman Stephen Green says raising that money now makes good business sense for the future.
"These are extraordinary times, they are very turbulent, they are very volatile and I think it is right that we should make sure that our capital continues to be absolutely beyond question in these extraordinary times," Green said. "Banks all over the place have been raising capital, some from government, some from the market, the market is expecting higher levels of capital and I think it is right that we should be ahead of those expectations if you will."
Julian Skan from the banking consultancy firm Accenture says it appears the move is being done for the right reasons.
The move is to provide a capital base for the bank so that it does not have any disruption to its strategy over the next five years," Skan said. "So, I think it is a good move to do it once rather than do it a number of times which could erode shareholder confidence. It is a large amount of money. What they are saying is that it is largely for acquisitions because they are distressed. So, I think, it is a good thing."
HSBC also plans to eliminate some 6,000 jobs in the U.S.
Meanwhile, British Prime Minister Brown has flown out to Washington. He will be meeting with President Obama at the White House on Tuesday and discussing what Brown calls the global new deal - a series of coordinated international actions aimed at easing the worldwide economic downturn.
The British leader will also address a joint meeting of Congress on Wednesday before returning home.