The threat of a painful global recession sent stock markets worldwide reeling Wednesday. Emerging market stocks, sovereign debt and currencies all came under intense pressure as investors unwound funding positions amid worries about the deteriorating world economy. The Saudi bourse closed its week sharply lower, with the Tadawul All-Shares Index (TASI) giving up 3.7 percent to 6,160.80 points. The decline was led by a 5.3 drop in petrochemicals and a 3.7 percent dip in banking.SABIC dropped six percent. Since the start of the year, it has shed almost half its value. The TASI slumped 10.2 percent this week and is down 44.2 percent since the start of the year. The Kuwait Stock Exchange declined to an 18-month low to close 2.15 percent down at 10,804.40 points, the lowest level since May 1, 2007. “There still exists a great deal of uncertainty in all the Gulf stock markets which is negatively affecting investor sentiment,” Saudi economist Abdulwahab Abu-Dahesh said. The Dubai Financial Market slumped 4.24 percent to close at 3,209.20 points after rising for two days. Real estate developer and market leader Emaar shed 5.3 percent while major construction firm Arabtec declined 6.8 percent. The Abu Dhabi Securities Exchange finished down 1.6 percent at 3,595.24 points as the key real estate sector dropped 5.6 percent. The energy sector shed 5.8 percent, while industrials managed a gain of 1.7 percent. The Doha Securities Market shed 3.3 percent to 7,919.09 points, sliding below the 8,000-point mark for the first time this week. The smaller Muscat Securities Market closed down 1.5 percent while the Bahrain Stock Exchange was down 0.5 percent. Major US stock indexes fell more than 3 percent in early trade after more bad news from U.S. companies. AT&T Inc and Boeing were among companies reporting weaker-than-expected earnings and drugmaker Merck & Co said it would cut 7,200 jobs. Battered US bank Wachovia Corp, set to be taken over by Wells Fargo & Co, posted a $23.9 billion third-quarter loss, a record for any US lender in the global credit crisis. The major European indexes – Britain's FTSE 100, Germany's DAX and the CAC-40 in France – all slipped about 4 percent. Asian markets veered sharply lower with Tokyo's Nikkei index tumbling 6.79 percent. Hong Kong's Hang Seng was down 6.2 percent, while South Korea's main index shed 5.1 percent. In India the BSE Sensex ended at 49.28/29 and the the S&P CNX Nifty at 3,065, down 5.25 percent. “Global recession concerns are responsible for the negative disposition,” said Patrick O'Hare, analyst at Briefing.com. British Prime Minister Gordon Brown echoed comments of Bank of England governor Mervyn King made late Tuesday. “We must now take action on the global financial recession which is likely to cause recession in America, France, Italy, Germany, Japan and -- because no country can insulate itself from it – Britain too,” he told parliament. King had warned late Tuesday that Britain was “likely” entering a recession – which is defined as two successive quarters of negative economic growth. Swiss bank UBS forecast Wednesday that the financial crisis will most probably tip the world economy into recession. It said the United States faced four quarters of contracting output and that a recession in Europe was “inevitable.”
