Asian stocks, US index futures and the dollar tumbled after the Senate rejected a bailout for US automakers, threatening to deepen the global recession. Treasuries rallied and yields fell to record lows.
The MSCI Asia Pacific Index lost 3.5 percent to 84.97 as of 4:20pm in Tokyo after senators voted down a bill to provide US$14 billion in emergency funds for General Motors Corp and Chrysler LLC. Honda Motor Co and Nissan Motor Co plunged more than 11 percent. The US dollar fell to a 13-year low against the yen, while the cost of protecting Asian bonds against default advanced. Metals and crude oil prices slumped.
“Investors have been betrayed again by US politiciansm” said Yasuhiro Miyata, who helps manage about US$109 billion at DIAM Co in Tokyo. “Even with the knowledge that we are in the midst of a crisis, they were unable to come to an agreement and investors have decided to abandon ship. This could have a substantial effect on unemployment.”
Futures on Standard & Poor’s 500 Index sank 4.3 percent. The measure dropped 2.9 percent yesterday, as General Motors shares plunged 10 percent, extending an 83 percent annual decline.
Japan’s Nikkei 225 Stock Average retreated 5.6 percent to 8,235.87. The CSI 300 Index sank 3.8 percent in China, after a government official said growth will slow more sharply next quarter. China Mobile Ltd. fell 7.1 percent in Hong Kong.
South Korea’s Kospi Index lost 4.4 percent, led by KB Financial Group Inc, after the Bank of Korea said the economy will expand at the slowest pace in 11 years next year.
Taiwanese shares were expected to weaken next week amid uncertainty over the US auto industry’s fate, dealers said on Friday.
Fears have escalated that a possible failure to rescue the auto sector would significantly boost the already high US unemployment rate and further drag down US demand, hurting Taiwan’s exports, they said.
Market sentiment remains cautious ahead of a US Federal Reserve Board policy meeting scheduled for tomorrow, they said.
The Taiwanese market is expected to test the 4,200 point support level next week, while any technical rebound during trade may encounter strong resistance at around 4,700 points, dealers said.
For the week to Dec. 12, the weighted index fell 256.20 points or 6.06 percent to 4,481.27 after a 5.28 percent decline a week earlier.
Average daily turnover stood at NT$85.11 billion (US$2.56 billion), compared with US$54.83 billion a week ago.
The market closed 3.74 percent lower on Friday as investors rushed to take profit after the US Senate reached no deal to keep the Big Three automakers afloat.
“I expect the selling will continue into next week as pessimism towards the US economy seems to run deeper due to the botched rescue plan,” President Securities analyst Steven Huang said.
Huang said the electronic sector may face greater pressure as it has been battered by falling US consumption.
Last month, Taiwan recorded a 23.3 percent decline in exports, marking the steepest fall since October 2001.
Other regional markets:
KUALA LUMPUR: Malaysian shares closed 0.1 percent down. The Kuala Lumpur Composite Index shed 8.41 points to close the day at 852.27 off an intraday low of 848.05.
BANGKOK: Thai share prices closed almost flat, just 0.04 percent higher.
JAKARTA: Indonesian shares ended 4.1 percent lower.