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Asia stocks track US down after Obama inauguration

business Updated: Jan 21, 2009 11:26 IST

AP
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Asian stock markets dropped on Wednesday, with Japan's benchmark down nearly 1 per cent, as concern that rising bank losses will cripple the world economy overshadowed the inauguration of US President Barack Obama.

Asia's downward lurch followed Wall Street, where investors returning from a holiday reacted to a rash of negative news about Western banks like Royal Bank of Scotland and sent key stock measures tumbling by more than 4 per cent.

Sentiment across the region was dour even as Obama assumed power on Tuesday vowing to "begin the work of remaking America," with hopes fading his administration can bring about a quick recovery in the world's largest economy.

"While it was a great day to hope, and fun to watch a part of history, investors are very much in tune to the reality that there is not a lot this new president can do to help Asia, or the world, let alone the United States, in the very near term," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. In Japan, the Nikkei 225 stock average dropped 75.61 points, or 0.9 per cent, to 7,990.18, while Hong Kong's Hang Seng Index shed 233.67 points, or 1.8 per cent, to 12,726.10.

Markets in South Korea, Australia and Singapore also retreated, while Shanghai's main index was little changed.

Overnight in New York, Wall Street pitched sharply lower as Obama took office, with the Dow Jones industrial average plummeting 332.13, or 4 per cent, to 7,949.09, its worst ever showing for an Inauguration Day.

Broader stock indicators also fell sharply, as the Standard & Poor's 500 index fell 44.90, or 5.3 per cent, to 805.22. Wall Street futures suggested US markets would recover in Wednesday trade.

In oil, light, sweet crude for March delivery added 41 cents to $41.25 in Asian trade. The contract fell $1.53 to settle at $40.68 overnight, with the February contract expiring on Tuesday. In currencies, the dollar gained to 89.96 yen, up from 89.86 yen, while the euro rose to $1.2973 compared to $1.2876.