Overview: Concerns over US economy trigger turmoil

By Dave Shellock in London, Michael Mackenzie and Nicole Bullock in New York

Published: July 15 2008 18:58 | Last updated: July 15 2008 21:25

Financial markets were engulfed by volatile trading yesterday as fears about the global financial sector were compounded by fresh concerns about the US economic outlook and a plunge in the price of oil.

Early in New York, global equities – which have been under intense pressure recently from worries about US mortgage agencies Fannie Mae and Freddie Mac – continued to slide, while the dollar touched a record low against the euro.

‘’Pessimism has really snowballed,’’ said William Strazzullo, chief market strategist at Bell Curve Trading. ‘’It has taken a real sense of panic for stock markets to keep breaking beyond the lows seen in March.’’

Wall Street briefly entered positive territory after oil plunged $9 a barrel at one stage. In choppy trade, only the Nasdaq managed to close modestly firmer. Some of the reprieve in stocks came when the Securities and Exchange Commission said it would issue an emergency order halting ‘naked’ short selling in major financial firms including Fannie and Freddie. The proposed rule will require short sellers to to borrow the securities before the short sale is effected and deliver the securities on settlement date.

Read More in the Financial Times

Growing fears over financials hurt dollar

By Sarah O’Connor

Published: July 15 2008 10:01 | Last updated: July 16 2008 02:49

A dollar sell-off swept the currency to a record low against the euro on Tuesday as fears grew for the brittle US financial sector.

The euro punched through $1.60 to set a record of $1.6038, before lower oil prices pushed the single currency back to $1.5893, down 0.1 per cent on the day.

The dollar’s weakness was more pronounced against the low-yielding yen and Swiss franc, which were boosted by intense risk aversion. It shed 1.4 per cent against the yen to Y104.83 and 0.5 per cent against the Swiss franc to SFr1.0112. Against a basket of six major currencies the greenback dropped as much as 0.8 before it pulled back to a loss of 0.1 per cent late in New York.

On Tuesday the dollar buckled amid a global equity sell-off as markets turned against the US government’s plan to support ailing mortgage agencies Fannie Mae and Freddie Mac.

Read More in the Financial Times