All Gulf markets, except Abu Dhabi, down

US stocks plummeted more than five per cent Monday, with the Dow Jones Industrial Average losing 625 points as investors on Wall Street reacted to Standard & Poor’s decision to cut the United States’ prized AAA credit rating. The Dow was down 5.5 per cent to 10,813.26 in closing trade, while the broader S&P 500 fell 6.6 per cent and the tech-heavy Nasdaq dropped 6.9 per cent. In pictures: Markets tumble The losses followed a volatile trading session in Europe and Asia. The FTSE 100 in London was down more than 85 points, or 1.63 per cent to 5,161.71, after embarking on a brief rally in early trading. Article continues below Germany’s DAX and France’s CAC also plummeted after opening positively on news that the European Central Bank had pledged to start buying government bonds in a bid to contain the Eurozone’s sovereign debt crisis. “We are in new territory in terms of risk to financial markets,” said Robert McKinnon, chief investment officer at ASAS Capital. “The foundation of US and European sovereign debt are huge components in terms of global risk, which will have a knock-on effect for banks. We are probably looking at an extended period of volatility,” he added. According to McKinnon, many global investors are holding positions in expectation of a significant government response. “Investors do not want to be completely out of the marketplace for fear of missing out on a short-term relief rally,” he said. Local markets continued to follow macro-economic issues amid thin local newsflow. The Dubai Financial Market slipped 0.76 per cent to 1,473.07, its lowest close since March 17. Every other GCC market was down except Abu Dhabi’s bourse, which bucked the negative trend to climb 0.37 per cent to 2,612.80 after plunging to a more than two-month low on Sunday. Asian stocks fell earlier with the regional benchmark index slumping 3.7 per cent to 126.08, its lowest close since March 15. “Both the Eurozone and the US require strong leadership, both of which have been strongly lacking recently,” said Akber Naqvi, fund manager at Al Masah Capital Management Limited. “While the US Congress took their country to the brink of default because of political ideals, European policy holders cannot formulate cohesive action because the Eurozone framework is in itself very complex. The S&P downgrade is an unprecedented event and will require time to digest,” he added. Call for compromise In Washington, President Barack Obama Monday essentially dismissed the downgrade, reassuring investors and the public that the nation’s leaders need only show more “common sense and compromise” to tame a staggering accumulation of debt. Seeking to demonstrate command in a volatile economic climate, Obama said he hoped the decision by Standard & Poor’s would at least give Congress a renewed sense of urgency to tackle debt problems. He said that must be done mainly by taking on the politically difficult issues of reforming taxes and entitlement programmes in the coming months. In his first public comments on the credit downgrade, which S&P announced Friday, Obama said Washington had the power to fix its own political dysfunction. “Markets will rise and fall,” he said. “But this is the United States of America. No matter what some agency may say, we’ve always been and always will be a triple-A country.”