Wall Street Contagion Infects Global Markets

The U.S. financial crisis has infected global financial markets, which have barely calmed down.

Amid growing uncertainty over the world economy, many stock investors sold their shares yesterday to shift their money to safer investment destinations, leading to a surge in the prices of gold and silver and U.S. Treasury bonds.

The Dow Jones average plunged 449.36 points or 4.06 percent to close at 10,609.66.

The tech-heavy NASDAQ fell 109.05 points or 4.94 percent to 2,098.85, its first fall of more than 100 points since the 2001 terrorist attacks on the United States.

The New York Stock Exchange saw plunges in the share prices of major financial institutions such as Goldman Sachs and Morgan Stanley. Though the two companies have suffered relatively less from the U.S. mortgage crisis among the five major U.S. investment banks, their share prices plummeted in the wake of the spread of financial market fears. Goldman Sachs suffered a drop of 13.9 percent and Morgan Stanley 24.22 percent.

Stock markets in Europe and Asia also experienced heavy turbulence.

England’s FTSE 100 fell 2.25 percent to close at 4,912.4, its first finish under 5,000 since June 2005. In Russia, a sharp fall caused its stock exchange to stop trading for the third consecutive day.

Japan’s Nikkei 225 dropped 2.22 percent, China’s Shanghai index fell 1.72 percent and Taiwan’s stock market descended 2.74 percent.

The prices of gold and U.S. Treasury bonds jumped. On the New York Mercantile Exchange, Gold for December delivery rose 70 dollars per ounce to 850.50 dollars. U.S. Treasury three-month bill rates fell 0.63 percentage points to 0.06 percent.

In Korea, the benchmark KOSPI stock index fell 32.84 points or 2.3 percent to close at 1,392.42. Over the course of the day, it fell to a yearly low of 1,366.88, replacing Tuesday’s low of 1,372.55. The tech-heavy KOSDAQ also fell 11.17 points or 2.51 percent to close at 433.76.

The won also weakened against the dollar, falling 37.3 points to close at 1,153.30.

higgledy@donga.com jefflee@donga.com