Markets plummet on downturn fears

Concerns over a 'double-dip' saw market participants rush to lock in profits after recent market rallies. The benchmark FTSE 100 Index closed at its lowest level for almost two months, finishing the day down 112 points at 4234 and Wall Street joined the sell-off, with the Dow Jones Industrial Average falling sharply in early trade and closing down over 200 points. Later the falls were mirrored in Asia, with Japan’s Nikkei 225 Stock Average slumping 277 points.

The World Bank had earlier released its revised estimate for global growth, which saw it forecast a fall of 2.9 per cent, compared to its earlier 1.7 per cent number. Arch-bear Nouriel Roubini also repeated his recession warnings, making references to "yellow weeds" rather then green shoots. The pessimism spread throughout global markets, and bond yields followed equities down, while commodities reacted with falls too. The price of oil dropped by $3 per barrel to $67, as worries re-surfaced over world demand and shares in BP and Royal Dutch Shell slid.

It also emerged that top executives at the biggest US companies have been overwhelming sellers of their own shares so far this month. Research company Trim Tabs said that executives at S&P 500 companies have sold $2.6bn in shares against just $120m in buying. This is usually taken as inside information that business is not in good shape at the country’s most important companies.

WHAT THEY ARE SAYING:

Samarjit Shankar, director of global strategy at Bank of New York Mellon, in the FT: "Risk aversion has resurfaced as market participants take profits on riskier exposures amid the World Bank's downward revision of its global growth forecast for 2009. Renewed concerns about the extent of the ongoing global recession and the sustainability of the green shoots of recovery have combined with the instability unfolding in Iran and North Korea to lend an air of pessimism to investor sentiment."

Nouriel Roubini, head of economics research firm RGE Global Monitor, in the Guardian: "I see there is a risk of a relapse, or of a double-dip recession. The recession is not going to be over today. It's going to last another six to nine months."