For Discussion: Wall Street Set To Plunge…Should We Be Worried??

- By Bossip Staff

Wall Street is set to plunge at Monday’s open after rating agency Standard & Poor’s cut the top-tier AAA credit rating of the United States, rattling already jittery investors. The agency’s move came late Friday after a wild week for U.S. stocks — the worst in more than two years — as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies dented investor sentiment.

U.S. stock index futures point to a decline of over 200 points on the Dow Jones industrial average at the start of trading Monday. Earlier, global stock markets sank again as worries about the downgrade of U.S. debt outweighed relief at a European Central Bank pledge to buy up Italian and Spanish bonds to help the two countries avoid devastating defaults.

European markets lost early momentum and most were trading sharply lower amid mounting fears over the opening of U.S. markets, when traders will have their first chance to respond to the U.S. debt downgrade.

Among the major markets, Japan’s Nikkei 225 stock average closed down 2.2 percent at 9,097.56, while Hong Kong’s Hang Seng fell the same rate to 20,490.50. South Korea’s Kospi ended 3.8 percent lower as did China’s main exchange in Shanghai.
MSCI’s broadest index of Asia Pacific shares outside Japan fell 4.2 percent, taking its losses for the month so far to more than 12 percent.

“It’s not Armageddon, but it feels like it,” said Hong Kong-based analyst Francis Lun, adding that he foresees the territory’s Hang Seng index to sink below 19,000 — a decline of a further 5 percent — before making any kind of comeback. Legendary investor Warren Buffett told CNBC Monday that there’s no question that the U.S. debt is still AAA and that he is not changing his mind about Treasurys based on S&P’s downgrade.
The dollar was lower against the yen and the euro. The U.S. dollar also hit a record low against the Swiss franc of 0.7485 centimes to the dollar — a drop of almost 30 percent from a year ago.
The price of oil pushed past $1,700 an ounce for the first time as investors sought shelter in assets traditionally viewed as safe havens in times of financial turmoil.

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