Asian stocks hit a two-year low today and European markets opened lower amid fears that the US will be forced to bail out Fannie Mae and Freddie Mac. In Tokyo the Nikkei tumbled 2.3%, leading declines across the region. Stocks of big European banks such as Barclays and Société Générale were sliding.
The slump signals that the worst housing crisis since the Great Depression is still far from bottoming out. The weak economic outlook also led oil to drop to below $112 a barrel. The dollar rallied once again, climbing to $1.46 per euro, but investors cautioned against seeing that as a sign of health. It "has little to do with dollar strength but more the weakness of the other currencies," warned one strategist.