U.S. stocks buck the up-trend, open sharply lower
— -- U.S. stocks opened sharply lower Friday, bucking the trend in Europe and Japan, where the Nikkei index recovered from its historic fall in the previous day's session.
In early trading, the Dow Jones industrials average was down again in triple digits before trimming its losses.
In Europe, major indexes were mostly positive. The FTSE 100 index of leading British shares was up1.6%, while Germany's DAX was up almost 1%. France's CAC-40 was up 1.09% in late afternoon European trading
Even though foreign stock markets were higher Friday, traders remain nervous after an extremely volatile week when massive gains Monday and Tuesday were mostly erased in the following two sessions. That volatility was evident Thursday on Wall Street, where a late wave of buying lifted the Dow Jones index 4.7% to 8,979.26, a swing of more than 800 points over the day. The Dow remains up 528 points, or 6.3%, for the week.
"Equity markets remain in something of a quandary as we approach the weekend break, with traders struggling to determine just how much additional value can be deducted regardless of the outlook for the global economy," said Matt Buckland, a dealer at CMC Markets.
"Whilst this dilemma continues, it seems as if the volatility we've seen of late will struggle to fade and it's also going to be difficult to call an end to these choppy market conditions," he said.
The long-term key is whether the flurry of activity by governments over the last week or so can actually break the logjam in credit markets. Despite the coordinated interest rate reductions announced last week, and massive liquidity boosts, the rates at which banks lend remain abnormally high, despite some easing this week. That could in turn make it harder for businesses and consumers to get the credit they need and hurt the economy.
The Hong Kong interbank offered rate, known as Hibor, for three-month loans fell to 4.19 from 4.35%, biggest drop in nearly a month.
Though the rescue packages have helped alleviate pressure on the banking system, they will do nothing to prevent a serious economic slowdown.
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