Stock futures frozen after steep plunge

NEW YORK (Reuters) – Stock index futures tumbled so sharply on Friday they had to be frozen at several points as global markets tumbled on signs the global economy is in the throes of recession.

Traders work on the floor of the New York Stock Exchange

Stock markets were in freefall around the world as panicked investors moved to liquidate risky positions. Japan's Nikkei index ended down 9.6 percent and European shares lost 8 percent.

By 7:00 a.m. in New York December Dow Jones futures were down 6.3 percent, Standard & Poor's 500 futures were off 6.6 percent and Nasdaq 100 futures were down 6.8 percent.

All three contracts lost the maximum amount permissible before the start of futures trading in the United States.

Both the New York Stock Exchange and Nasdaq said trading would open as normal at 9:30 a.m EDT.

"The markets are basically following grim news that's coming out of the global economy ... It's basically feeding on itself," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"It's just a question of right now the markets are in the process of discounting a global recession and how severe it's going to be."

According to Reuters data, December S&P futures hit a low of 855.20, while Dow Jones futures touched a low of 8,224 -- the lowest levels at which both contracts could trade in a session. The Nasdaq fell to 1,168.50.

Jeremy Hughes, a spokesman for the Chicago Mercantile Exchange in London, said both contracts were "limit down."

"The limit is calculated at roughly 5 percent down. At that point it can't go any further down but it is still accessible and can go up again," he said.

"When the U.S. futures open in Chicago, the contract becomes available again, so (it could go) further down another 5 percent down, so 10 percent in total," he added.

Financial shares were poised to see deep losses, with bank shares tumbling 6.1 percent before the bell.

A slew of profit warnings from major Asian companies slammed Tokyo's Nikkei during its Friday session, while European equities fell by almost 10 percent at one point to hit their lowest since May 2003.

The MSCI global equities index lost 4.5 percent.

"There will be more margin calls today and something sinister is brewing," said City Index chief market strategist Tom Hougaard in London.