Asian stocks tumbled across the board yesterday in the face of record oil prices, as crude neared US$100 a barrel driven by the continued weakness of the US currency.
Trading screens went red throughout the region as Hong Kong slid 4.2 percent, Tokyo closed down 2.46 percent at a 16-month low and Seoul dropped to a three-month low, off 3.5 percent.
In Taipei, TAIEX closed 2.27 percent lower at the day's low of 8,484.11.
"The market's failure to extend its dramatic turnaround of yesterday reflects a still heavy overhang of global uncertainties," said Oliver Fang, an assistant vice president at Yuanta Core Pacific Securities (
Fang said that Taiwan's bourse fared relatively better than the Japanese, Korean and Hong Kong markets.
"Government attempts to shore up the stock market in the run-up to the parliamentary elections in January are unlikely to be tried prematurely," he said.
"That kind of intervention should be more realistic after the middle of next month."
Elsewhere in Asia, Mumbai shed 3.52 percent, Singapore lost 2.65 percent and Jakarta fell 2.3 percent.
Smaller declines marked Sydney and Shanghai as relative bright spots, down 0.6 percent and 1.5 percent respectively.
For the first time, oil futures topped US$99 before pulling back, teasing the psychologically crucial US$100 mark as the struggling greenback kept dollar-denominated crude attractive on the market.
"It's on the upswing again," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz. "I think the market is poised to make another run towards US$100."
The spike pushed airline stocks sharply lower in Hong Kong, with several issues losing three percent or more.
Asian markets shrugged off Tuesday's modest gains on Wall Street, where the Dow picked up 0.4 percent and the NASDAQ inched ahead 0.13 percent.
Analysts said the driving factor was not closing levels but overall volatility, after the US indices saw sharp swings in both directions in a choppy session dominated by worries about the US housing and finance sectors.
News of a big loss for mortgage finance giant Freddie Mac, which had appeared insulated from the subprime crisis, raised concerns that the US housing slump is deepening.
Meanwhile the Federal Reserve issued a forecast pointing to slowing growth next year, with the outlook much more uncertain than it was as recently as June.
With those concerns looming on the eve of the Thanksgiving holiday, dealers said investors were cautious about making any bold moves.
"People are waiting for Thanksgiving Day in the US and our elections this weekend before making decisions," said Ric Klusman, head of institutional trading at Aequs Securities in Australia.
Analysts said the dollar's woes revived worries that China, sitting on more than US$1 trillion in foreign exchange reserves, could be tempted to divert at least some of its holdings to a stronger currency.
The dollar hit record lows around US$1.4850 per euro while the yen hit a two-year high of 108.81 per US$1.
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