World equity markets spiraled lower yesterday after Wall Street had struck a near 12-year low overnight, as investors were unconvinced by Washington’s bank rescue strategy, analysts said.
Taiwanese share prices fell 1.06 percent yesterday, with the weighted index losing 47.6 points to close at 4,430.18 on turnover of NT$56.47 billion (US$1.63 billion).
“The market was relatively strong if compared with the rest of the markets in the region,” said Chen Yu-yu (陳育娛) of Capital Securities (群益證券).
“The marked did not rebound as much as NASDAQ did last month. So when NASDAQ tumbled lately, the local market resisted the fall,” he said.
Chen said he expected the market to move within a range of 3,900 to 4,900 points in the weeks ahead.
Tokyo shares dived to within striking distance of a 26-year trough after the rout in New York as investor worries grew over the banking sector.
“Equity markets are weaker ... as worries about the US financial sector continue to weigh heavily,” said analyst Edward Keeling at Dolmen Stockbrokers. “Wall Street slumped to a 12-year low with investors growing increasingly concerned that the [US] government’s plan to convert its stake in Citigroup into large common stock holdings will fall short of what is necessary to fix the ailing financial sector.”
“Meanwhile in Japan, the Japanese Finance Minister Kaoru Yosano has said the Japanese government is looking at stock buying and other methods to support the share market,” he said.
But Tokyo tumbled 1.46 percent to close at 7,268.56, the worst finishing level in almost four months.
European markets also fell sharply in late morning trade, with London’s FTSE 100 index of leading shares losing 1.23 percent and the Paris CAC 40 shedding 1.49 percent.
Frankfurt’s DAX 30 plunged 2.17 percent after closing underneath 4,000 points for the first time in four years on Monday.
In earlier deals, Japan’s Nikkei index had briefly dipped below last October’s closing low of 7,162.90, which was the weakest point since 1982, but clawed back ground as a weaker yen provided some comfort to investors.
Elsewhere in Asia, Hong Kong reversed 2.9 percent, Shanghai erased 4.56 percent and Seoul closed down 3.24 percent.
“Equity markets have taken another mauling,” said Calyon analyst Stuart Bennett. “It is not that policymakers are not coming up with ideas to kick start the financial sector, because they are.
“We have the US stimulus measure and bank support, German moves on nationalizing banks, speculation that the BoJ [Bank of Japan] may purchase shares and the UK government using the nationalized Northern Rock bank to boost mortgage lending.
“Hence efforts are being made, but as always the devil is in the detail and at the moment the market is rattled by the perception that there is not enough detail as to what these plans will actually mean and how long they will take to last, with each actual, or rumored policy announcement providing more questions than answers,” he said.
Wall Street indices had plunged on Monday as investors were disappointed by the latest plan from Washington to prop up the ailing US banking system.
The Dow Jones Industrial Average nosedived 3.41 percent to 7,114.78 points, crashing below its November bear market low and hitting its lowest close since May 1997.
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