Stock markets around the world fell to their lowest levels of the economic crisis yesterday as a spate of dividend cuts and faltering financial companies shook investor confidence.
A sharp sell-off in London pushed the FTSE 100 index to a six-year low, and to its lowest level in 14 years in dollar terms.
On Wall Street, the S&P 500 dropped 4.7 per cent to its lowest level since November 1996, bringing its losses for the year to 22.4%. The Dow Jones Industrial Average fell below 7,000 for the first time since 1997 and is down 22.9% this year.
The slump followed dramatic falls in Asian stocks, and came amid the disclosure of AIG’s $61.7bn (£44bn) fourth-quarter loss, HSBC’s giant capital-raising and a slew of dividend cuts by multinational corporations. After last week’s decision by General Electric to cut its pay-out, HSBC, PNC Financial and International Paper all reduced theirs yesterday, as Standard & Poor’s forecast the most drastic reductions in US dividends since 1938.