Wall Street’s main indicator the Dow Jones index, rose 192 points in the first hour of trading and then retreated by more than 200 points, only to recover some of the lost ground towards lunchtime. This followed a partial recovery in London after an initial 18 per cent fall.
Observers said that interest rate cuts by two large banks and assurances from the US central bank, the Federal Reserve, had helped to start an early rally in New York. They said that trading was extremely nervous with no certainty that a rally could be sustained.
The dramatic collapse of world markets stripped the wealth of millions of people and raised fears of a global economic recession.
Share prices on the Australian sharemarket yesterday plunged an unprecedented 25 per cent, wiping $65,000 million from the market value of local companies in less than four hours’ trading, after record one-day downturns in New York and London.
Falls outnumbered rises by almost 40 to one as nervous onlookers packed the public gallery of the Melbourne Stock Exchange on the worst trading day for the local market.
A stressed broker at the Melbourne Stock Exchange.Credit:James Boddington
The breathtaking swiftness and severity of the sharemarkets’ collapse has shocked even the most pessimistic market observers. Yesterday’s losses far outstripped and previous one-day falls in world sharemarkets.
Even the largest corporations in Australia and around the world have not been spared from the savage markdown in share prices.
The selloff, triggered by concerns about the United States economy, started in New York on Friday and quickly spread to other markets in Asia and Europe when trading began on Monday.
In Tokyo, the Japanese Government intervened in an attempt to halt the panic, which yesterday resulted in a 14.6 per