The world's financial markets opened Monday with little indication that the Y2K computer glitch would derail the global economy.
|Hong Kong's stocks closed at a record high on Monday, as investors sidelined by year-2000 fears piled back in with a vengeance.
In fact, investors in Asia the first region to open for work Monday promptly sent two stock markets soaring to new heights, while the day began smoothly in Europe.
U.S. stocks, however, turned sharply downward in late
morning trading as investors started pocketing profits that
would have boosted their tax bills only on Friday, and the
euphoric post Y2K-rally deflated.
The Dow Jones industrial average was down 165 points,
or 1.44 percent, at 11,331, while the benchmark 30-year U.S. Treasury bond was down 1-13/32 with a yield of 6.59 percent, its highest in two years.
The Standard & Poor's 500 index was down 27 points,
or 1.84 percent, at 1,442. The technology-heavy Nasdaq composite
index, which was up more than 3 percent shortly after
the open, was down 61 points, or 1.52 percent, at 4,007.
``There was almost a buying panic at the opening,'' said
Peter Gottlieb, a vice president and portfolio manager at First
Albany Asset Management in Chicago. ``Right now, you see a lot
of people taking profits.''
Currency Trading Begins Without a Hitch
Nevertheless, currency trading began 2000 glitch-free when U.S.-based traders arrived on Monday for their first full session after the millennium computer rollover.
``We are totally Y2K compliant. Everything is working
perfectly,'' said Peter Lorraine, senior foreign exchange
manager at Brown Brothers Harriman in New York.
A spokesman for the New York Federal Reserve, which deals
directly with money-centre banks in the international financial
markets, said payments systems were operating normally.
``All our internal and external systems are holding up quite
well,'' said Vincent Amaru, vice president at Citibank in New
The same situation was apparent across the globe, and that turned Monday into just another trading session at many of the world's financial markets.
Germany Retreated From Record Highs
Germany's DAX gave up its early gains to slip below par on Monday afternoon, retreating from record highs as weak banks weighed on gains by telecoms and technology stocks.
``Fundamentally nothing has changed. It's New Year's
euphoria,'' one trader said of the early rally which fizzled
out. ``There are no computer problems and now we can move on.''
Asian Markets Rally
Asian asset markets shrugged off potential millennium bug chills on the first day's trade in 2000, remaining infected instead with the high-tech stock fever that had sent shares soaring to record levels in 1999.
Asia's biggest market, the Tokyo Stock Exchange, won't reopen
until Tuesday, and Chinese stock markets were also closed Monday to
allow officials to conduct system checks.
But techology and communications plays drove stocks in Hong Kong
and Singapore to fresh highs and a bug-free rollover pushed
Malaysian shares up, while Manila was the blot on Asia's trading
landscape, where half the markets were closed for public
Singapore's Straits Times Index (STI) shot up four percent
to a record close of 2,582.94 on Monday. A similar story unfolded in Hong Kong's Hang Seng, up 2.4 percent on the day with nine of the 10 biggest movers having a high-tech or communications angle.
"The Y2K issue has proven to be a non-event and people can
get on with the job of buying equities," Steve Brice, senior
treasury economist at Standard Chartered told Reuters
"It seems that's the way to go at the moment and you almost
seem to be a fool if you stand in the way of it," he said.
In the Philippines, banks, the stock market, and key sectors
such as power, telecommunications and air transport were operating
smoothly on the first day of work, said Science and Technology
Secretary Filemon Uriarte.
"All the banks have started operating again and we have good
news from everyone so far," said Djamhari Sirat, who heads the
Indonesian government's Y2K task force in Jakarta.
Brazil Has Smooth Opening
Brazil's major financial
markets were clean of any Year 2000 computer problems at the
start of trade Monday, authorities and traders said.
Latin America's biggest bourse, the Sao Paulo Stock Exchange
(Bovespa), saw a smooth opening while the BM&F; Futures and
Commodities Exchange also reported no problems.
"It's as calm as ever," said a spokeswoman at the Bovespa.
"Computers, telephone lines, energy, everything is
functioning normally until now," said a spokeswoman at the
Russia Shrug Off Yeltzin's Resignation
Russian financial markets also reacted calmly to Boris Yeltsin's New Year's eve resignation and the banking system has not suffered from any Y2K problems, Central Bank Chairman Viktor Gerashchenko said on Monday.
"The change of power in Russia has not produced a major
shock on Russian financial markets, and as for foreign markets,
the prices of Russian paper have risen," RIA news agency quoted
Gerashchenko as saying.
Gerashchenko, speaking after meeting acting President
Vladimir Putin, said the new Kremlin chief wanted the central
bank to find ways of boosting Russians' spending power.
He also said there were no problems in Russia's banking and
financial systems as a result of the date rollover on computers
from 1999 to 2000.
"We entered 2000 all right," he said.
Russian banks are on holiday until Wednesday. The main
foreign exchange trading session and share-trading system are
not due to resume until Thursday.
Meanwhile, Israeli shares ended up over 3.5 percent on Monday to hit new records as investors showed relief
over a smooth transition to the year 2000 and expected a bull
run to continue in the coming months, traders said.
Not that the Y2K bug was nowhere to be seen: In Tokyo, about a dozen small brokerages reported Y2K-related
glitches in a record-keeping system. They were quickly fixed. Ten
small Hong Kong companies reported minor hardware or software
problems possibly caused by Y2K, said K. C. Kwong, the government's
secretary for information technology and broadcasting.
"None of these were serious problems," said Kim With of
Norway's National Civil Preparedness Board.
But there were no reports of calamitous failures as feared and
stock markets responded.
The French Ministry of Finance announced: "Today, there has
been no bug, which is to say that all the great computer and
electrical systems around the world successfully passed in the year
2000. And of course, we're very satisfied."