Stock Market Quarterly Review --- Led by U.S. Tribulations, Third Quarter Held More Pain for World Markets --- European Shares Tumbled, Japan Gave Up Some Gains And Emerging Stocks Varied
Global markets ended the third quarter much the same way they began: marked by confusion and volatility that left investors searching for a bottom.</br></br>As ever, the U.S. was on the minds of traders around the world, as global investors followed the stream of accounting restatements, Wall Street gyrations and geopolitical maneuverings that shaped market action abroad.</br></br>Yet even by post-bubble standards, the period stood out for its painful mood swings. It began with near panic about the state of corporate governance and the quality of U.S. earnings. These concerns pounded stock prices globally, climaxing with new lows for the bear market near the end of July. A sharp rally followed and many investors predicted that the long-awaited bottom had at last arrived.</br></br>Then last month fresh evidence that a world-wide recession could be looming drove many foreign markets back through their July lows. Despite a dose of encouraging U.S. economic news last week, investor spirits remained glum.</br></br>"There was a capitulation of hope, really," said Andrew Parry, chief investment officer for Northern Trust Global Investment (Europe) Ltd. "The world economic outlook is a lot more hostile and less easy to rebuild than people first realized, and the third quarter was when markets caught up with this reality."