Asian stocks plunge on unabated credit market woes
Asian stock markets fell sharply as recent steps by the world's major economies to fortify credit markets failed to stem escalating fears that the spreading financial crisis could spawn a global recession.business Updated: Oct 08, 2008 10:26 IST
Asian stock markets fell sharply on Wednesday as recent steps by the world's major economies to fortify credit markets failed to stem escalating fears that the spreading financial crisis could spawn a global recession.
After a miserable day on Wall Street when the Dow Jones industrials lost more than 500 points, investors in Asia responded by dumping stocks in a broad regional sell-off.
Japan's benchmark Nikkei 225 stock average plunged 4.8 per cent, sliding under the psychologically important 10,000 level for the second straight day. The market is now at its lowest level in five years.
"Selling seems almost unstoppable because of uncertainty over the crisis," said Kazuki Miyazawa, market analyst at Daiwa Securities SMBC Co Ltd in Tokyo. "Investors simply don't find incentives to buy stocks,"
The carnage was just as brutal in Hong Kong, where the blue chip Hang Seng index tumbled 5.8 per cent to 15,833.25. Australia's benchmark S&P/ASX200 shed 3.4 per cent, wiping out a 1.7 per cent gain on Tuesday after the country's central bank cut its key interest rate by a larger-than-expected 1 percentage point. Key indices in South Korea, Taiwan, Singapore, New Zealand and China were also sharply lower.
"We're not seeing any respite on Wednesday; we're actually under severe pressure," said Ric Klusman, an institutional dealer with Aequs Securities in Sydney.
"People are very, very nervous that Europe will get belted tonight as they didn't see a lot of the late losses in the US session, and people just think it's going to get worse," he added. In New York on Tuesday, the Dow lost more than 5 per cent despite efforts by the Federal Reserve to reinvigorate the dormant credit markets by invoking emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the short-term debt that firms use to pay for everyday expenses like salaries and supplies.
Federal Reserve Chairman Ben Bernanke warned in a speech on Tuesday that the financial crisis could prolong the difficulty the economy is facing. While his remarks were widely regarded as a sign that an interest rate cut could be in the offing, Wall Street appeared little comforted and focused on his downbeat assessment. In currencies, the dollar weakened slightly to 101.25 yen in Asia early on Wednesday afternoon from 101.38 yen late on Tuesday. The euro stood at US$1.3585 compared with US$1.3550.