Credit concerns continue to hit markets

Source: Stock Market Digital

Date :15/08/2007 09:08:48

Shares in Asia have fallen again as concerns about global credit conditions - driven by much publicised problems in the US mortgage sector - continue to affect the markets.

Japan's Nikkei-225 index dropped 2.2 percent, its lowest level in eight months.

Exporters have been hit by concerns over the strength of US spending.

The Dow Jones fell 1.6 percent yesterday to 13,029 while the Nasdaq lost 1.7 percent to 2,499.

The falls came despite the Federal Reserve saying it would inject more funds into financial markets if they were required.

The Reserve has already pumped billions of dollars of emergency funds into the banking system in recent days - twice on Friday and again on Monday – in an effort to ease concerns over available credit.

The European Central Bank (ECB) and the Bank of Japan have also made similar moves.

Recent financial market volatility has been triggered by the US sub-prime mortgage sector, which offers higher-risk loans to people with a poor credit history.

As US interest rates have risen, a growing number of sub-prime borrowers have defaulted on their loans prompting extensive financial difficulties for a number of investment funds with heavy exposure to the sector - and triggering fears of a wider financial crisis.

Some estimates predict $300 billion in loans could be at risk, but analysts say that one of the biggest worries for investors is not knowing the full scale of the problem.

August 15 2007