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Asian stocks plunge on economic fears
August 9, 2011, Tuesday
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Online Edition
Online Edition
Asian stock markets spiraled downwards today, deepening sharp losses over the previous two sessions brought on by the historic US credit downgrade and the debt crisis in Europe.
The MSCI Asia Pacific Index slumped 3.9 percent around noon in Tokyo while Hong Kong's Hang Seng Index fell more than 20 percent from a November high.
Federal Reserve Chairman Ben S. Bernanke and his colleagues will hold a meeting today as the unprecedented downgrade of the US' top credit rating increases the likelihood that America's recovery will falter.
"We're now in the capitulation phase for the markets," said Todd Martin, Asia equity strategist at Societe Generale SA in Hong Kong. US policy makers are not "moving towards solutions. We're dealing with global imbalances, we're dealing with Asia, that has had inflationary problems for the last 12 months," he said in a Bloomberg Television interview.
New Zealand, the first in the Asia-Pacific to open, dropped 3.70 percent.
"It's a horrible place to be, dark days are upon us," said IG Markets institutional dealer Chris Weston from Melbourne. "How much further to fall is the question people are asking.
"People are trading on emotions at the moment rather than looking at the rational situation. There's widespread panic."
Fear continued to dominate after the unprecedented downgrade of the United States by Standard & Poor's on Friday and a warning from the head of the European Commission Thursday that the debt crisis in the eurozone had likely spilt over into other economies.
Asian stocks had been expected to open lower after Wall Street suffered its steepest one-day drop since late 2008 yesterday, with the Dow Jones Industrial Average falling 5.55 percent, while the broader S&P 500 fell 6.7 percent and the tech-heavy Nasdaq dived 6.9 percent.
Those losses were accompanied by a similar sell-off elsewhere, with Frankfurt down more than 5.0 percent, Paris down 4.7 percent and London diving nearly 3.4 percent.
The MSCI Asia Pacific Index slumped 3.9 percent around noon in Tokyo while Hong Kong's Hang Seng Index fell more than 20 percent from a November high.
Federal Reserve Chairman Ben S. Bernanke and his colleagues will hold a meeting today as the unprecedented downgrade of the US' top credit rating increases the likelihood that America's recovery will falter.
"We're now in the capitulation phase for the markets," said Todd Martin, Asia equity strategist at Societe Generale SA in Hong Kong. US policy makers are not "moving towards solutions. We're dealing with global imbalances, we're dealing with Asia, that has had inflationary problems for the last 12 months," he said in a Bloomberg Television interview.
New Zealand, the first in the Asia-Pacific to open, dropped 3.70 percent.
"It's a horrible place to be, dark days are upon us," said IG Markets institutional dealer Chris Weston from Melbourne. "How much further to fall is the question people are asking.
"People are trading on emotions at the moment rather than looking at the rational situation. There's widespread panic."
Fear continued to dominate after the unprecedented downgrade of the United States by Standard & Poor's on Friday and a warning from the head of the European Commission Thursday that the debt crisis in the eurozone had likely spilt over into other economies.
Asian stocks had been expected to open lower after Wall Street suffered its steepest one-day drop since late 2008 yesterday, with the Dow Jones Industrial Average falling 5.55 percent, while the broader S&P 500 fell 6.7 percent and the tech-heavy Nasdaq dived 6.9 percent.
Those losses were accompanied by a similar sell-off elsewhere, with Frankfurt down more than 5.0 percent, Paris down 4.7 percent and London diving nearly 3.4 percent.
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