FRIDAY saw stock markets around the world collapse further, following on from the dramatic slump in shares on Thursday, triggered by fears that the deepening economic crisis in the US is heading for a 1930s-type slump.
After a bright start, which saw stock markets in London, Germany and France all open higher, they all fell significantly in the late morning trading.
The initial slump, which began yesterday morning, was sparked by a Federal Reserve warning about the deepening economic crisis in the US.
Reassurances yesterday from the G20 that it was ready to take action to stabilise markets failed to calm investors.
A Letter by the G20, attempting to calm the markets, admitted: ‘We have not yet mastered the challenges of the crisis. Global imbalances are rising again. External risks to the stability of our banks and our economies are reaching pre-crisis levels.
‘And volatile and high energy prices are hurting our citizens and acting as a drain on world growth.
‘At the same time, the confidence of citizens, businesses, and markets has been damaged due to the lack of visible political will: this in itself is holding back the recovery.’
The letter continues: ‘The July agreement to strengthen the Eurozone Financing Facility was an important first step.
‘Euro countries now need to ratify this agreement as soon as possible, alongside implementing reforms to deal with excessive deficits, improving economic competitiveness, and acting now to strengthen banking systems.
‘The Eurozone must look at all possible options to ensure long-term stability in the world’s second largest international currency.’
Despite the attempted reassurances by the G20, by lunchtime Friday all major stock exchanges around the world were suffering further significant losses.
The FTSE 100 was down a further 1.45%, at 4963.1, just below the important 5,000 mark, meaning a loss of £80bn over the last two days.
The German Dax exchange was down 2.52%, while the Dow Jones opened fractionally down amidst fears that it would plunge lower later.
• Big collapses on the world markets are having an adverse effect on private pensions, Isas and retirement funds.
Since the start of this year alone, pension income from retirement savings has fallen by 14%.
Moneyfacts states that a shares Individual Savings Account of £10,000 at the start of the year would now be worth £8,778, a 12.2% drop.