Asian stock markets tumbled yesterday, following Wall Street lower as US presidential election euphoria gave way to worries about the global economy and company profits.
Japan’s Nikkei stock average retreated 6.5 percent to 8,899.14, and Hong Kong’s Hang Seng Index lost 7.5 percent to 13,727.50.
South Korea’s benchmark Kospi index broke a five-session winning streak to dive 7.6 percent.
PHOTO: AP
China’s Shanghai Composite Index closed down 2.44 percent and Australia’s S&P/ASX200 index closed 4.3 percent lower.
Markets in Singapore, Taiwan and Indonesia also dropped sharply.
European stocks followed Asia into sharp declines yesterday and oil extended losses as weak US data intensified fears about the impact of recession in major economies hit by the worst financial crisis in 80 years.
AGREEMENT
In South Korea, stock market agencies yesterday announced an agreement to set up a 515 billion won (US$390 million) fund to stabilize the volatile bourse.
The fund will buy 100 billion won worth of shares every month on the local bourse over the next five months.
Agreement was reached between the Korea Securities Dealers Association (KSDA), the market operator Korea Exchange, the Korea Securities Depository and the Asset Management Association of Korea, the KSDA said in a statement.
In European trading, the euro and sterling fell against the dollar as investors braced for the European Central Bank and the Bank of England to cut interest rates by at least half a percentage point.
Russia’s largest stock exchange MICEX halted trading of stocks for one hour after stock prices fell sharply.
The pullback in global equities was in line with weakness on Wall Street, where investor optimism surrounding the election of Democrat Barack Obama as president on Wednesday quickly evaporated in the face of gloomy economic news.
The US service sector, the largest component of America’s GDP, contracted sharply last month as new orders and employment took a tumble.
“We had one week of a rebound and then we’re coming back to reality,” said Francis Lun (藺常念), general manager of Fulbright Securities (富昌證券) in Hong Kong.
“Despite the euphoria over the election, the world’s economy hasn’t changed,” Lun said.
VOLATILITY
In New York on Wednesday, volatility swept over the US market again, with the Dow Jones industrial average falling 486.01, or 5.1 percent, to 9,139.27.
The S&P 500 index and the NASDAQ composite also shed more than 5 percent each.
“We’re back to the grim reality of economic data showing recessionary conditions and lower earnings guidance,” said Bernard McAlinden, investment strategist at NCB Stockbrokers.
“The counterbalance is interest rate cuts. We’re no longer in a situation where big cuts would cause panic,” he said.
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