Mounting fears about tattered government finances in Europe drove the euro down and hammered stock markets across Asia yesterday following New York’s worst finish since November.
The European currency sank to an eight-month low with risk-averse investors bolting for the safe-haven dollar, despite concern that US jobs data out later in the day would flag enduring weakness in the world’s largest economy.
“What we’re seeing is a wave of panic selling,” said Francis Lun (藺常念), general manager at Fulbright Securities (富昌證券) in Hong Kong, where the Hang Seng index tumbled below the key 20,000 level for the first time in five months.
PHOTO: REUTERS
The euro dropped to 1.3670 dollars at one point, the lowest level since late last May. In Tokyo afternoon trade it stood at 1.3707, from 1.3726 in New York late on Thursday.
“European debt concerns have strengthened the US dollar and this has stoked concerns that ... risk aversion may heighten further,” Min Sang-il of E*Trade Securities in South Korea told Dow Jones Newswires.
Hong Kong’s Hang Seng Index dived 676.56 points to end at 19,665.08. Singapore’s Straits Times Index was down 1.95 percent.
Tokyo plummeted 2.89 percent, or 298.89 points, to end at 10,057.09.
Seoul ended 3.05 percent, or 49.30 points, down at 1,567.12. In Australia, the S&P/ASX200 plunged 2.32 percent to end at 4,514.3.
The European currency was hit by increased fears that crisis-hit EU members such as Spain and Portugal could be in for the same troubles as debt-ridden Greece.
It was also weighed by the European Central Bank’s decision to maintain record-low interest rates.
“A spike in risk aversion following renewed concerns about the health of European sovereigns saw equity markets pummeled,” NAB Capital analysts wrote in a note to clients.
“It’s very bad sentiment for the euro, it’s a sell-off for the euro definitely,” said Lee Sue Ann, a treasury economist with Singapore’s United Overseas Bank.
Ben Potter, IG Markets strategist in Australia, said: “It seems the problems in Europe are only deepening.”
The shockwaves across Asia came after Wall Street’s Dow Jones index dived 2.61 percent to end at 10,002.18 on Thursday, its lowest since November, after a brief dip below 10,000.
In advance of yesterday’s US Labor Department survey of non-farm payrolls, weak data on US jobless claims combined with heightened fears of debt problems in EU countries to drive investors away from equities.
Chinese shares closed down 1.87 percent as banks and energy stocks were hardest hit by renewed recovery concerns, dealers said.
The Shanghai Composite Index, which covers both A and B shares, was down 55.91 points at 2,939.40 on turnover of 110.9 billion yuan (US$16.2 billion).
“Jittery investors are now focused on the external factors, another whammy for the market after domestic credit tightening concerns were priced in during the recent correction,” Guotai Junan Securities (國泰君安證券) analyst Ci Weixiang said.
Oil reversed earlier losses as dealer made the most of cheaper prices. New York’s main contract, light sweet crude for March delivery, rose US$0.27 to US$73.41 a barrel. The benchmark had plunged nearly US$4 in New York Thursday.
Brent North Sea crude was up US$0.13 to US$72.26 after dropping US$3.79 in London.
Hong Kong gold opened at US$1,064 to US$1,065 an ounce, down from Thursday’s close of US$1,105.50 to US$1,106.50.
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