The worst financial crisis in 80 years hit emerging markets hard on Wednesday, leading to emergency measures by central banks and calls for international assistance to prevent investors from pulling out. In the United States, there was also negative news as companies like AT&T Inc and Boeing reported lower-than-expected earnings and Merck & Co announced layoffs. Wachovia Corp, a struggling bank soon to be acquired by Wells Fargo & Co, reported a record $23.9 billion loss in the third quarter. Emerging market stocks, debt, and currencies all suffered as investors sold off assets due to concerns about the global economy. Despite some efforts to stabilize the financial system, fears of a global recession remained dominant. Hungary raised interest rates by three percentage points in order to protect its currency, the forint. Belarus requested credit from the International Monetary Fund, while Ukrainian Prime Minister Yulia Tymoshenko anticipated substantial financial assistance from the IMF. The IMF is also prepared to assist Pakistan and Iceland, both facing financial challenges. Neil Dougall, chief emerging markets economist at Dresdner Kleinwort, noted that capital is shifting from emerging markets back to developed markets. Optimism was somewhat overshadowed by the ongoing problems, but there were positive statements from officials regarding the financial crisis. This has led to significant financial aid from governments worldwide. David McCormick, U.S. Treasury Undersecretary, mentioned in Hong Kong that while the U.S. economy faces challenges in the coming quarters, there is potential for recovery starting late next year. He emphasized the importance of restoring confidence in the financial market. Mervyn King, Governor of the Bank of England, suggested that the worst may be over for the financial system, as he plays a key role in discussions among the Group of Seven nations regarding the crisis. Late on Tuesday, he stated that we are still a long way from reaching stability, but he believes that the plan to recapitalize the banking system, both domestically and internationally, will be recognized as a turning point in the banking crisis of the previous year. Recent developments, such as a decrease in U.S. dollar short-term funding costs in London and Asia, suggest that banks are starting to rebuild trust in each other. Additionally, Russia, a strong emerging market that has been affected by the crisis, has shown signs of progress in bank lending, with interbank lending returning to normal. The rates are decreasing after being high, as banks are beginning to lend to sectors again. However, according to First Deputy Prime Minister Igor Shuvalov, it will still take two to three weeks for the situation to show signs of improvement. Despite efforts to combat financial collapse, there is a looming fear of recession due to the deteriorating global economic climate. The UK economy has significantly worsened, with the Bank of England cutting rates in response. Governor King mentioned that the UK is likely entering its first recession in 16 years. Financial markets were filled with concerns as Wall Street was expected to open poorly, with Dow Jones industrial average futures dropping 259 points, or nearly 3 percent. European shares were down over 4.4 percent, Japan's Nikkei average fell 6.8 percent, and MSCI's sector index for emerging markets hit its lowest level since June 2005. Sovereign debt spreads widened to over 700 basis points over Treasury yields for the first time since early 2003. Other currencies, aside from the forint, were also struggling, with the Turkish lira hitting a two-year low and South Africa's rand dropping to its lowest level in over 6 years against the dollar. Sanjay Mathur, an economist at the Royal Bank of Scotland in Singapore, stated that the challenges of a business cycle downturn will likely be quite severe. Various US companies reported quarterly results on Wednesday, providing insight into the state of different industries and sectors in the world's largest economy. While tobacco companies Philip Morris International and Reynolds American Inc, as well as fast-food chain McDonald's Corp, exceeded analysts' expectations with their profits, they were exceptions in an otherwise bleak outlook.