[PEN-L:1348] Market drops another 300 points

[Louis Proyect <lnp3@xxxxxxxxx>]

August 31, 1998

Dow Drops More Than 300 Points

Filed at 3:27 p.m. EDT

By The Associated Press

NEW YORK (AP) -- The Dow industrials plummeted below 8,000 today for the
first time in seven months in a drop that was more than wiping out all of
this year's gains.

The Dow Jones industrial average, which rose 43 points in the opening
minutes of trading, was down as much as 317.45 at 7,734.23 during the final
hour of trading. It began recovering a bit within minutes but still was off
254.37 at 7,797.31 late in the day on volume that was heavy but below last
week's frenzied pace.

In the sharp selloff, the Dow gave up the last of this year's gains. It
ended 1997 at 7,908.25. The last  the Dow closed below 8,000 was on Jan. 30.

In last week's global stock market rout, the Dow plunged 481.97 points, or
by 5.6 percent, its biggest percentage drop for a calendar week since 1989.

At July's peak, when the Dow was at 9,337.97, it had been up 18.1 percent.
The drop of 16.5 percent from the July record is the biggest retreat since
a 21.2 percent slide triggered by the Persian Gulf crisis in the summer and
fall of 1990.

In the heady bull market that began in October 1990 and saw the Dow nearly
quadruple, setbacks were routinely viewed as buying opportunities. Lately,
however, traders have been viewing any attempts at a recovery as a selling
opportunity.

Doubts about Russia's economic and political stability kept pressure on
financial markets around the world. Russia's parliament today
overwhelmingly rejected the appointment of Viktor Chernomyrdin as prime
minister.

Share prices fell in Europe, undercut by Wall Street's sharp morning
retreat. Major stock indexes fell sharply earlier in Hong Kong and
Singapore, but Japan posted a modest gain after dropping to a 12-year low
Friday.

In Europe, a key index of German stock prices closed down 2.3 percent and
leading market gauges also finished lower in France, Italy, Switzerland and
the Netherlands.

Markets in London, the largest in Europe, were closed for a holiday.

Hong Kong's key Hang Seng Index sank 5.7 percent in the first seven minutes
of trading today and d the day with a 7.1 percent decline, falling 554.70
points to 7,275.04.

In Singapore, the benchmark index fell 28.83 points, or 3.25 percent, to a
new low of 856.43 after g below the 900-point level on Friday for the first
time in 10 years.

However, stock prices rose on the Tokyo Stock Exchange, where the benchmark
225-issue Nikkei Stock Average gained 192.26 points, or 1.38 percent, to
close at 14,107.89.

Elsewhere in Asia, the key stock index in Taiwan fell 2.8 percent to finish
at a 22-month low and prices fell 1.4 percent in Australia, but stocks
ended up 1.8 percent in South Korea.

Across Asia, Europe and the Americas, many stock markets fell by big
percentages last week. That left some people wondering if the year-old
Asian financial crisis, and the recessions it has caused in regional
powerhouses such as Japan and Hong Kong, could spread to the West and sour
its economies.

On Sunday, Japan's chief economic planner, Taichi Sakaiya, proposed an
emergency summit of major industrialized countries to address the chaos
roiling world financial markets.

To make matters worse, the ruble's collapse in Russia has set off political
and economic instability there.

In Hong Kong today, the Hang Seng Index seemed to fall sharply because the
government has reduced  role in trading.

For two weeks, Hong Kong's government had been buying stocks to drive the
Hang Seng Index to a  at which speculators who bet on stock prices falling
would lose money.

On Friday, that aggressive government buying pushed trading volume to a
record $10.1 billion. Traders estimated the government spent $9.1 billion.

Speculators today suddenly found it more expensive to bet against Hong Kong
markets because of new measures taken by the Futures Exchange over the
weekend to curb manipulation.

Even though stock prices seemed far more stable in Tokyo today, signs of
gloom and fear about the world's economic future also remained high in some
areas.

"I'm worried," said Kazuomi Kobayashi, a 52-year-old Tokyo barber who
dabbles in stocks as he stood in front of a large electronic board in
downtown Tokyo showing the latest Nikkei numbers. "I've lost so much. When
I buy, it goes down. When I buy again, it goes down again."

Even in Singapore, where newspapers often work with the government to keep
people calm, signs of panic prevailed.

"World markets sent reeling: World faces global meltdown as its leaders
fail to find solutions to Russia's worsening crisis," said the front-page
headline in Saturday's The Straits Times.

"Fear of complete meltdown rules markets," said a headline in The Business
Times today.

Copyright 1998 The New York Times Company


Louis Proyect

(http://www.panix.com/~lnp3/marxism.html)