Asian markets record big losses

January 28, 2008 9:13:54 AM PST
Asian stocks tumbled Monday as traders took their cues from Wall Street, where persistent worries about a possible U.S. recession sent shares sinking Friday. India's benchmark stock index dropped 4 percent in the first 10 minutes of trading and Hong Kong's market slid 4.7 percent by midday. U.S. stock index futures also were down, suggesting that shares could drop again when the market opens in New York.

Investors around the world have been jittery for weeks about a U.S. slump, which would likely weaken demand for exports and drag on global growth. There is also concern about a worldwide credit crunch triggered by rising defaults in risky U.S. mortgages, which has led to mountains of bad assets at major American and European banks.

Japan's benchmark Nikkei 225 index was down 3.6 percent, erasing much of its 4.1 percent jump from Friday. In mainland China, the Shanghai Composite Index was down 5.5 percent. Markets in South Korea, Thailand and Taiwan also declined.

"There's a lot of uncertainty out there: uncertainty over the U.S. economy, uncertainty over China's economy," said Rob Hart, an analyst with Morgan Stanley in Hong Kong.

"People are also worried about contagion in Europe. If the U.S slows down, will it trigger a slowdown in Europe?" he said.

European stocks fell slightly Friday amid ongoing speculation about potential problems in the banking sector.

Last week was a tumultuous one for global markets, and it appeared the turmoil would continue.

Asian and European stocks had plunged early last week on worries about slower U.S. growth. They rebounded after a hefty three-quarters cut in interest rates by the Federal Reserve last Tuesday, as well as news of an economic stimulus package. By Friday, markets in Hong Kong and Tokyo, for example, had nearly recovered their early week losses.

But investors in Asia dumped shares again Monday after Wall Street sank Friday, when the Dow Jones industrials sliding 1.38 percent to 12,207.17and the technology-heavy Nasdaq composite index declining 1.47 percent to 2,326.20.

Some traders said Asian markets were dropping on concern that the Fed may not slash interest rates again or as much as expected when its policy planners meet Tuesday and Wednesday.

"The possibility for a 50 basis points cut is looking less likely," said Castor Pang, a strategist at Sun Hung Kai Financial in Hong Kong, pointing to future prices in New York.

Dow futures were down 73 points, or 0.60 percent, to 12,163, while Nasdaq futures were down 16.5 points, or 0.92 percent, to 1,777.

Japanese traders were cautious ahead of a slew of corporate quarterly earnings this week, including Honda Motor Co. on Wednesday and Sony Corp. on Thursday.


Load Comments