Asian markets tumble <again> on US worries By YURI KAGEYAMA, AP Business Writer
36 minutes ago
Global stock markets extended their slide for a second day Tuesday, plunging amid fears that a possible U.S. recession will cause a worldwide economic slowdown.
The dramatic declines in Asia and Europe so far this week were expected to spread to Wall Street, where stock index futures were already down sharply hours before the trading day began.
Japan's Nikkei 225 index nose-dived 5.7 percent — its biggest percentage drop in nearly 10 years — to 12,573.05, a day after falling 3.9 percent. Australia's benchmark index sank 7.1 percent, the market's steepest one-day slide in nearly 20 years.
Hong Kong's Hang Seng index, which slumped 5.5 percent Monday, finished down 8.7 percent. In China, the Shanghai Composite index lost 7.2 percent to 4,559.75, its lowest close since August.
Indian Finance Minister P. Chidambaram urged investors to remain calm after trading in Mumbai was halted for an hour when the stock market there fell 10 percent within minutes of opening. The Sensex rebounded some later to finish down 4.6 percent.
"There is no reason at all to allow the worries of the Western world to overwhelm us," Chidambaram said.
European markets, which fell sharply Monday, were volatile Tuesday. By midmorning the U.K.'s FTSE 100 had slipped 1 percent, Germany's DAX dropped 2.9 percent, while France's CAC 40 declined 1.1 percent.
Investors have dumped shares in frenetic trading the last two days on worries that the U.S. economy, battered by a credit crisis and housing slump, will shrink in coming months, weakening demand for exports.
There is also skepticism that American authorities will be able to prevent a recession. The Federal Reserve has indicated it will lower interest rates further, and President Bush has proposed an economic stimulus package that includes $145 billion in tax cuts, but investors around the world are doubtful that the measures will lift the economy quickly.
"Unless we get some positive 'shock effects,' such as drastic measures from the U.S. government, there is almost no hope for a recovery in stocks," said Koji Takeuchi, senior economist at Mizuho Research Institute in Tokyo.
Oil and gold prices also fell. Light, sweet crude for February delivery fell to $87.72 a barrel on expectations that slower U.S. growth will lead to less demand for crude. Spot gold, which usually benefits from market uncertainty, fell to a two-week low of $855.20 per troy ounce.
U.S. markets were closed Monday for a holiday commemorating civil rights leader Martin Luther King Jr. But Wall Street future prices were down sharply, portending a plunge when trading begins at 9:30 a.m. Eastern time.
Dow Jones industrial average futures were down 523 points, or 4.3 percent, to 11,583, while Standard & Poor's 500 futures were down 64.4 points, or 4.8 percent, at 1,260.
Noritsugu Hirakawa, who monitors stock trading at Okasan Securities Co. in Tokyo, said investors were spooked by the drastic falls on Chinese and Indian markets — the two emerging economies that are viewed as sustaining global growth even as the U.S. economy sputters.
"The end to the slides in Asian stocks is nowhere in sight," he said. "There is even speculation that China may be exposed to the U.S. subprime mortgage crisis."
Indonesia's benchmark index closed the day down 7.7 percent, Singapore's Straits Times index sank 6 percent and Taiwan's market fell 6.5 percent.
Asian markets have been in a downward spiral for most of January. Since the start of the year, Japan's Nikkei index has tumbled nearly 18 percent, while the Hang Seng is down a stunning 22 percent.
Even the usually upbeat Japanese Economy Minister Hiroko Ota acknowledged that threats were growing.
"We must take the approach of working together with other nations on this," she said on nationally televised news.
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Associated Press writers Ramola Talwar Badam in Mumbai and Cassie Biggs in Hong Kong contributed to this report. |
