The Implosion Continues on Friday

The panic which has enveloped global stock markets continued in N.Y. Friday as investors grew more fearful over the status of Morgan Stanley and Goldman Sachs. Morgan Stanley fell over 40% in New York on top of Thursday's 26% decline after Moody's put its A1 long-term rating on review for a possible downgrade. Moody's also lowered its outlook for Goldman Sach's Aa3 long-term rating to negative. Goldman shares were recently losing 19%.

Egan-Jones Ratings said Morgan Stanley probably needs to raise $60 billion in new equity to reassure customers and investors, up from a $30 billion estimate yesterday. The investment bank has about $900 billion of assets and an equity market value of $15.9 billion.

"The markets are just being hit with wave after wave of disastrous news," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "Libor tightened further and now, there's serious concern over the Lehman Brothers' credit default swap settlement." The total value of the contracts, to be settled within the next couple of weeks, is estimated around $400 billion.

In recent trade, the DOW was down 318 points (-3.7%). The broader S&P 500 was off by 43 points (-4.7%) while the NASDAQ was losing 67 points (-4.1%). Crude futures were trading $5.79 lower to $80.83 per barrel. Gold futures were moving higher by $4.20 to $887.30 per ounce. The dollar was stronger against the high-yielding euro (0.93%) and pound (0.38%) but was down by 0.29% against the yen as carry trades continued to evaporate.

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