Stock markets around the world are braced for losses running into billions of pounds today after the New York Stock Exchange suffered its biggest fall since Black Monday in 1987.
With further heavy falls in Far Eastern stock markets driving investors into a frenzy of selling, the Dow Jones index fell by over 554 points, a drop of 7.18 per cent. The market closed for business an hour early as the New York Stock Exchange introduced a series of curbs designed to prevent drastic movements in share values.
The 554-point fall in the Dow Jones industrial index was the biggest ever, even greater than the 1929 crash. However, in percentage terms, the 7 per cent fall in the market was lower than in 1929 or 1987.
Dealers believe that the early close on Wall Street means that many sell orders were left uncompleted and that Wall Street may weaken further today. Industrial and high-technology stocks exposed to Asian markets were hardest hit yesterday.
Senior members of the American administration were at pains to emphasise the health of the US economy and President Clinton attempted to to calm the jittery financial markets.
The White House spokesman, Mr Mike McCurry, said that President Clinton was "confident that the US economic fundamentals were strong". Unemployment and interest rates are remaining low.
Mr McCurry said that the President was following the market closely but would not "speculate" on the massive falls on Wall Street.
There are strong fears that a combination of factors - the collapse in Far Eastern stock markets, possible higher US interest rates and Britain's stated intention of remaining outside European Monetary Union for at least five years - will bring an abrupt end to one of the strongest bull markets in share prices for many years.
The Irish stock market was closed for the bank holiday yesterday. But with share prices on European stock markets already down heavily even before the worst of the collapse on Wall Street, hundreds of millions of pounds are likely to be wiped off the value of Irish shares today. The slump on international stock markets will also reduce sharply the value of pension funds and investments in life assurance products held by thousands of private investors.
How heavily the European stock markets fall will depend largely on overnight trading in the Far East, particularly in Hong Kong and Tokyo.
Up to yesterday the Japanese stock market had withstood the collapse which hit stock markets in the "tiger economies" of the Far East - Hong Kong, Singapore, Malaysia and Taiwan. However, the Nikkei index in Tokyo fell by almost 2 per cent yesterday due to domestic as well as international factors. If the major Japanese investment funds start moving their money from shares into more secure investments, then share prices worldwide could be in for severe falls.
The Hong Kong market yesterday continued its roller-coaster ride, with a fall of more than 6 per cent in the Hang Seng index wiping out all the gains of last Friday, when the market staged a modest recovery.
The view last night was that the assault on the Hong Kong dollar by speculators - the main reason for the collapse in Hong Kong share prices - will continue, despite the avowed intention of the Hong Kong administration to retain its exchange rate against the American dollar.
An attack last week on the Hong Kong dollar, similar to the speculative onslaughts which forced Thailand, Malaysia and Indonesia to abandon their fixed exchange rate systems, has rocked confidence in the territory, according to analysts.
British shares tumbled yesterday for the fourth day in a row, hitting a two-month low. They fell even further after the Chancellor of the Exchequer, Mr Gordon Brown, ruled out entry to EMU for the duration of the present parliament.
The Australian share market suffered it's biggest loss since the crash in 1987, plunging more than 9 per cent before settling at 8.6 per cent down at mid-session.
The fall-out from the Wall Street sell-off saw share prices in Singapore dive by 7.3 per cent in the first half hour of trading.
In New Zealand, the NZSE-40 Capital Index was 11.9 per cent weaker in the mid-morning trade but recovered 23 points by noon to be 10.24 weaker.
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