US stocks tumbled on Monday as the credit storm continued to wreak havoc on Wall Street. Lehman Brothers filed for bankruptcy and Bank of America looked set to acquire Merrill Lynch but many feared further casualties lay ahead.
The Dow fell 4.42 per cent, while the NASDAQ dropped 3.6 per cent. The S&P 500 tumbled 4.71 per cent, tearing through a key support level and suffering its largest decline since the September 11 attacks.
Goldman Sachs and JPMorgan fell 12.1 per cent and 10.1 per cent respectively, while Citigroup was down 15.5 per cent.
British stocks ended almost 4 per cent lower on Monday as banks tumbled, with the benchmark FTSE 100 closing 3.92 per cent lower.
Financials were plagued by the demise of Lehman and the fears over the fate of American Insurance Group. HBOS dived 17.6 per cent to an all-time low, on concerns it could face higher borrowing costs as a result of Lehman’s collapse.
Royal Bank of Scotland was down 10 per cent, Barclays fell 9.8 per cent and HSBC dropped 3.3 per cent. Prudential was down 9.3 per cent and Old Mutual lost 7.7 per cent.
European stocks also dropped. Banks and insurers across the continent were heavily impacted by the latest credit crisis victim.
UBS shares dropped almost 15 per cent after media reports that the Swiss bank would have to write down another US$5 billion in the second half. UBS said it had enough capital to face this and future market crises.
Deutsche Bank fell 6.4 per cent, while Credit Agricole fell 9.2 per cent and Societe Generale was 9.6 per cent lower. BNP Paribas dropped 7.2 per cent on worries about the size of its loan exposure to Lehman.
Fortis and Dexia, which both have large structured credit portfolios, fell 8.4 per cent and 9.8 per cent respectively.
In the insurance sector France’s AXA fell 8.5 per cent, in Germany Allianz lost 6.1 per cent and Swiss Re lost 8.1 per cent. Aegon slid 10.4 per cent.
