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New Delhi: It was a hectic Sunday for finance ministers and financial market regulators across the globe. Amid widespread fear of an equities meltdown and rush to buy gold on Monday following the recent downgrading of the US's credit rating, assorted authorities were frantically trying to work out measures to reassure the spooked markets.
Officials from G-20, the world's leading economic powers, held a teleconference on Sunday to discuss possible coordinated action to minimize the damage for the markets when they reopen after the weekend.
The European Central Bank was deliberating whether to buy Italian government bonds in a bid to prevent a widening of the crisis in the Euro zone. The world's seven economic superpowers (G-7) too were expected to hold consultations later in the day.
In India, finance minister Pranab Mukherjee was in touch with the Reserve Bank of India and the market regulator Securities & Exchange Board of India in an attempt to gauge the scale of the problem and initiate measures that could limit the damage of the US losing its 'AAA' sovereign rating for the first time since 1917.
While sources told TOI that the impact on India would be limited, there were worries over the overall stock market mood given that foreign institutional investors might sell Monday morning. The assessment was also borne out of experience after West Asian markets tanked on Saturday and Sunday.
"If at all, it will be panic selling. As soon as things settle down, these investors would return as there are few markets that offer this type of returns in these times," said an official tracking the Indian markets.
Sources, however, said the RBI and government are expected to comfort the Indian markets before they reopen on Monday.
Officials said that despite the selloff last week due to fears of a fresh bout of recession in Europe and the United States, the Indian markets did not see any settlement or liquidity problem.
Bankers said that they have not received any instructions from the government so far.
S&P draws flak, says it may cut rating further
White House economic adviser Gene Sperling questioned the downgrading of the US credit rating by Standard & Poor's, saying the agency stuck with its decision despite having made a $2 trillion mistake in its projections. "It smacked of an institution starting with a conclusion and shaping any arguments to fit it," he said. S&P retorted that the administration's criticism was a "misrepresentation" and that there was a one in three chance of a further downgrade in six months to two years. P 17
West Asia stocks fall after US downgrade
West Asian stock markets dropped on Sunday, with Israel's TA-25 index tumbling 7%, its biggest single-day decline since October 2000. The Dubai Financial Market Index too opened trading down 4.5% before clawing back some ground to end the day 3.7% weaker at 1,484 points, its worst drop since February. Shares in Emaar Properties shed 5%. In Abu Dhabi, the General Index closed down 2.5% at 2,603.22. The Dhaka index was down 2.2%, while Pakistani bourses were closed. P 17 'Repeat of 2008 collapse unlikely'
Though some expect the markets to respond the way they did on September 15, 2008 after Lehman Brothers collapsed over the weekend, market players said there is a crucial difference in terms of liquidity available in the system. "In recent weeks liquidity has improved and it's not the same situation as September 2008," said the treasury head of one of the largest financial institutions in India.
Today's trading sessions in the eastern markets are likely to be watched eagerly.
Readers can catch an update on the global markets that open early and the initialtradingonIndianmarkets in Sandhya Times, a TOI Group publication, on Monday afternoon.
On Saturday, finance minister Pranab Mukherjee had sought to comfort markets by saying that India would continue to achieve appreciable growth despite negative sentiments across the world.
Officials from G-20, the world's leading economic powers, held a teleconference on Sunday to discuss possible coordinated action to minimize the damage for the markets when they reopen after the weekend.
The European Central Bank was deliberating whether to buy Italian government bonds in a bid to prevent a widening of the crisis in the Euro zone. The world's seven economic superpowers (G-7) too were expected to hold consultations later in the day.
In India, finance minister Pranab Mukherjee was in touch with the Reserve Bank of India and the market regulator Securities & Exchange Board of India in an attempt to gauge the scale of the problem and initiate measures that could limit the damage of the US losing its 'AAA' sovereign rating for the first time since 1917.
While sources told TOI that the impact on India would be limited, there were worries over the overall stock market mood given that foreign institutional investors might sell Monday morning. The assessment was also borne out of experience after West Asian markets tanked on Saturday and Sunday.
"If at all, it will be panic selling. As soon as things settle down, these investors would return as there are few markets that offer this type of returns in these times," said an official tracking the Indian markets.
Sources, however, said the RBI and government are expected to comfort the Indian markets before they reopen on Monday.
Officials said that despite the selloff last week due to fears of a fresh bout of recession in Europe and the United States, the Indian markets did not see any settlement or liquidity problem.
Bankers said that they have not received any instructions from the government so far.
S&P draws flak, says it may cut rating further
White House economic adviser Gene Sperling questioned the downgrading of the US credit rating by Standard & Poor's, saying the agency stuck with its decision despite having made a $2 trillion mistake in its projections. "It smacked of an institution starting with a conclusion and shaping any arguments to fit it," he said. S&P retorted that the administration's criticism was a "misrepresentation" and that there was a one in three chance of a further downgrade in six months to two years. P 17
West Asia stocks fall after US downgrade
West Asian stock markets dropped on Sunday, with Israel's TA-25 index tumbling 7%, its biggest single-day decline since October 2000. The Dubai Financial Market Index too opened trading down 4.5% before clawing back some ground to end the day 3.7% weaker at 1,484 points, its worst drop since February. Shares in Emaar Properties shed 5%. In Abu Dhabi, the General Index closed down 2.5% at 2,603.22. The Dhaka index was down 2.2%, while Pakistani bourses were closed. P 17 'Repeat of 2008 collapse unlikely'
Though some expect the markets to respond the way they did on September 15, 2008 after Lehman Brothers collapsed over the weekend, market players said there is a crucial difference in terms of liquidity available in the system. "In recent weeks liquidity has improved and it's not the same situation as September 2008," said the treasury head of one of the largest financial institutions in India.
Today's trading sessions in the eastern markets are likely to be watched eagerly.
Readers can catch an update on the global markets that open early and the initialtradingonIndianmarkets in Sandhya Times, a TOI Group publication, on Monday afternoon.
On Saturday, finance minister Pranab Mukherjee had sought to comfort markets by saying that India would continue to achieve appreciable growth despite negative sentiments across the world.
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