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Market Outlook: 10-07-08

Robert Hsu, October 07, 2008

Last Friday, Congress passed the bailout plan and gave a tiny boost to domestic markets. Unfortunately, the move did not give markets the huge support that some investors were expecting. Beyond this, however, the financial crisis has grown worse and also contributed to the crash we saw on Monday and Tuesday. Let's take a closer look.

We have see in recent days how the financial crisis has bled into global economies. It is threatening banking systems and stock markets around the world, and claiming victims one by one. Europe happens to be the most recent victim–financial giants across the continent crumbled to the ground this past weekend, and now authorities there are trying to avoid a financial meltdown.

Seeing that the U.S.'s financial problems are now violently shaking up other financial systems increased worries of a global recession earlier this week. As a result, investors sold off their shares. The MSCI Emerging markets Index fell 10.5% -- its worst loss in two decades. Hong Kong's Hang Seng Index lost 4.9%, Japan's Nikkei plummeted 4.25% and Russia's RTS Index dropped 13.9%.

And, of course, these losses led to a sell-off in the Dow, which traded below 10,000 for the first time since 2004. Even though the U.S. took a step in aiding the markets with passing the bailout plan last Friday, investors' fears of a global recession proved to be too great.

So, is there any move that would help the markets?

Continued on next page.

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