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The worst of times, the best of times?

The markets were already jittery before September 11 but the terrorist attacks sent volatility soaring. The central banks poured money in to provide liquidity and cut interest rates, politicians made rallying calls to investors to help keep markets up and some hedge funds promised not to short stocks, while some lenders refused to make them available for shorting. Yet market forces prevailed: indices plummeted and then started to bounce all over the place. But some investors feel the worst is over and buying opportunities will abound.

NYSE soon got back to work, but
doing more selling than buying

A lot of equity fund managers, on both sides of the Atlantic, will have seen nothing like it before in their careers.

Anyone working in the markets from the early 1990s onwards experienced a huge bull run. Apart from the odd blip, markets kept going upwards. The S&P, Dow Jones and FTSE indices all hit record levels, and Nasdaq was a law unto itself.

Then came the bursting of the tech bubble and increased volatility. However, in the wake of the terrorist attacks on New York and Washington, volatility has taken on a whole new meaning. Wall Street, closed by the attacks for its longest period since the Depression, reopened on Monday September 17 and world markets, always highly concerned with the US, were watching closer than ever before to see how it would react.

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