In recent history, this was probably one of the worst weeks for the global financial market. Wall Street experienced its lowest since 9/11. Asian markets too experienced 3-year lows. In Russia, the regulators had to halt trading for 2 days in a row.
But somehow the bulls managed to rebound towards the end of the week. U.S. stocks surged on Thursday, after the world's leading central banks swung into action to inject massive liquidity into the crumbling credit markets. The U.S. market on Thursday (September 18) recorded its biggest 1-day percentage gain since October 2002.
Although the Federal Reserve has decided against cutting rates, it lent $85 billion to AIG to keep its nose above water. Incidentally, from Monday, AIG will be replaced by Kraft Foods in the Dow Jones.Washington Mutual put itself on the block but the share price picked up later in the week on reports that Wells Fargo and Citigroup may be interested in buying the mortgage lender. Lehman Brothers declared bankruptcy but British bank Barclays is acquiring its core businesses in North America. Lloyds TSB of London is buying British home mortgage lender HBOS. Bank of America came to the rescue of Merrill Lynch.
Back home, the market did react violently on Monday. The Sensex witnessed an intra-day fall of 850 points on but recovered to end the day at 13,531, a fall of 470 points over Friday’s (September 12) close of 14,000. On Tuesday, the Sensex opened with a negative gap, touched a low of 13,052, remained range-bound before aggressive buying saw it close at 13,519. The market continued to slide the next day and closed at 13,262.90 on Wednesday. But the last 2 days of the week saw the bulls come out.
After the bulls reigned supreme on Wall Street on Thursday, markets all over the world got a boost. The Asian markets rallied on Friday, including India. European markets, which opened later, also joined the rally.