MercoPress. South Atlantic News Agency

Fears of worse to come make markets immune to liquidity injections

Stock market still the way down

A week after share prices around the world first began to fall markets in Asia on Thursday were still on the way down following on the volatility that has gripped United States and European markets.

The South Korean index dropped more than 6.5% and trading was briefly suspended, while Japan's Nikkei lost more than 2.5% in the morning session. In Hong Kong, the Hang Seng lost 2.5% in early trading, losing 534.49 points to reach 20,841.23. The markets were nervous, after New York closed below 13,000 on Wednesday for the first time since 24 April. New York's S&P 500 index dropped 19.8 points or 1.4% to 1,406.70 at close of trading on Wednesday, which means it has now wiped out all of its gains for the year. New York's S&P 500 index dropped 19.8 points or 1.4% to 1,406.70 at close of trading on Wednesday, which means it has now wiped out all of its gains for the year. In Latinamerica Mexico's index dropped 2.61%; Argentina's Merval 5.71%; Brazil's Bovespa 2.9%, accumulating a loss of 11.8% in August and Chile's IPSA fell 2.44% and 7.99% in August. The falls are being caused by continuing concerns about the state of credit markets worldwide and what has been identified as a "re-pricing of risks". The problems in the US housing market came to the fore again as Merrill Lynch told its clients to sell any shares they own in the country's largest mortgage lender, Countrywide Financial. It warned that Countrywide could face bankruptcy if the availability of credit in the market gets any worse and there were market rumors that the lender had indeed failed to raise some money it needed. Worries about a slowdown in US consumption were not helped by results from the department store Macy's, which blamed the "difficult" climate for a 77% fall in its quarterly profits. Earlier in the session, investors were soothed by US government data that showed consumer inflation rising by just 0.1% in July, slightly less than expected. The news that the Federal Reserve had made another 7 billion US dollars of reserves available to the banking system should also have soothed the market.