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Global markets battered by recession fears

business Updated: Oct 16, 2008 11:53 IST

AFP
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Fears of a global recession sent Asian stocks plunging on Thursday, with Tokyo down almost 10 per cent after Wall Street suffered its worst percentage drop in two decades.

Renewed panic erupted on global markets after a dismal US retail sales report stoked fears that the credit crunch will push some of the world's biggest economies into deep downturns.

"Don't stand in front of the freight train," said Sonray Capital Markets chief economist Clifford Bennett. "This is clearly a panic with further to go. The equity market game has fundamentally changed."

Japan's Nikkei dropped almost 1,000 points or more than 10 per cent in early trade, wiping out most of Tuesday's record rally. By early afternoon it was down 9.5 per cent, close to its biggest loss in two decades.

Elsewhere, Seoul lost 7.3 per cent while Sydney dropped 6.3 per cent. Hong Kong sank 6.1 per cent in early trade while Shanghai fell 3.2 per cent.

The market has "picked up on the fear factor," said ABN Amro Morgans private client adviser Bill Bishop. "There is nowhere to hide."

The Dow sank 7.87 per cent on Wednesday after US retail sales fell much more than expected and Federal Reserve chairman Ben Bernanke said a recovery from the financial crisis would not happen right away.

Oil prices continued to fall, with Brent North Sea crude dropping below US$ 70 a barrel for the first time since June 2007.

World stock markets have fallen heavily this year as the global credit crisis brought down once-mighty Wall Street giants Bear Stearns and Lehman Brothers and prompted a raft of government bailouts of troubled Western banks.