There has been mounting alarm around the world that a global stock market rout might be developing.

With heavy selloffs on Wall Street spilling over into Tokyo, the benchmark Nikkei average fell below the 12,000 barrier Tuesday, a level unseen since February 1985.

On Wall Street, the technology-heavy Nasdaq composite index has dropped below 2,000, and the Dow Jones industrial average slipped below 10,000.

Until recently, key downside factors on the Tokyo Stock Exchange were negative domestic factors and worries about the information technology sector.

In the current market environment, where world equity markets are behaving like dominoes, fears are widespread that the selloffs will long continue reverberating globally.

The world markets are now awaiting government measures to help shore up share prices.

Attention is focusing on the Bank of Japan's policy-setting committee meeting set for Monday and the meeting of its U.S. counterpart, the U.S. Federal Reserve's Federal Open Market Committee, scheduled for Tuesday.

There is speculation that concerted interest rate cuts will be in the offing in the U.S., Japan and Europe.

The question is whether the European Central Bank is willing to join its Japanese and U.S. counterparts in their concerted moves to ease credit.

A failure by the ECB to join such a concerted effort would prompt a switch in a global flow of money away from the U.S. and Japan and into Europe.

Such a bearish scenario for the dollar will no doubt undermine concerted efforts to pull the world economy out of its present predicament.

The BOJ now appears likely to ease its grip on credit further by reviving its "zero-interest-rate" policy and will probably funnel more money into the banking system in an effort to ease deflationary pressure on the economy.

The anticipated U.S. interest rate cuts of 75 basis points or more will no doubt have a positive impact on the economy and provide a floor for falling New York share prices.

All told, a strong rebound appears to be in the offing.