Global markets show little sign of settling after their most turbulent day in four years. As David Pollard reports, flagging global growth and the end of U.S. stimulus is making investors nervous.
Most thought there would be a lull after Wednesday. If anything, the carnage intensified. Within hours of the open, the FTSE Eurofirst 300 was down to a 13-month low. Southern Europe's markets were badly hit - but even Germany's DAX was deep in the red. Trader Oliver Roth of Close Brothers. (SOUNDBITE) (German) CLOSE BROTHERS SEYDLER BANK CHIEF TRADER, OLIVER ROTH, SAYING: ''We have political crises such as the conflicts in Iraq and between Ukraine and Russia. But overall, we are more concerned about the European economy where it's really not going too well ... As for the Americans, there is some doubt as to how things will go there.'' It's a toxic cocktail. But for many it boils down to two questions. Does the rout point to a profound shift in the outlook - especially in Europe? Or: is it just volatility? Alastair McCaig of IG says Germany is key. (SOUNDBITE) (English) IG GROUP MARKET ANALYST, ALASTAIR MCCAIG, SAYING: ''It feels very much like they've been dragged back to the likes of France and Italy and the others. So it is a real worry and especially when you consider that they're effectively the sort of the last resort as it were, the ones that we're going to help boost everyone else." There are other concerns. New data shows euro zone inflation slid to 0.3 per cent in September. Core inflation - which strips out food and energy - is also, worryingly, on the slide. Greek debt yields topped the seven per cent threshold many see as crucial for a second day. Though hopes are high that this time around, any problems in Greece would be contained. (SOUNDBITE) (English) IG GROUP MARKET ANALYST, ALASTAIR MCCAIG, SAYING: ''The encouraging aspect is there isn't any direct dominoes fears. The likes of Portuguese debt is around about the three per cent level, not even over three and half per cent. So there's still a pretty healthy buffer zone.'' And there's a third question. What can central bankers - especially the ECB - do when rates are already rock bottom? (SOUNDBITE) (English) IG GROUP MARKET ANALYST, ALASTAIR MCCAIG, SAYING: ''With the mood that the markets are in, I don't think that they can last that long without at least the promise of something else materialising. I would imagine discussions about some sort of quantitative easing will be brought to the table. Whether it's actually acted upon is another debate.'' Thus far, QE has been seen as a possibility early next year. Unless brought forward, that could mean a long and nervous wait.