Asian stocks suffered fresh carnage yesterday, with leading bourses plunging by up to 5 percent as growing fears of a US recession swept across global markets, dealers said.
They said that a surprise contraction in the giant US service sector triggered concerns that the world's largest economy may be in even worse condition than previously feared.
Hong Kong tumbled 5.4 percent, Tokyo lost 4.7 percent, Singapore gave up 3.5 percent and Sydney fell 3.2 percent.
The Seoul, Taipei and Shanghai bourses escaped the latest rout, for now at least, as they were closed for the Lunar New Year holiday.
Hong Kong and Singapore also shut early for the start of the holiday and will reopen on Monday.
"The string of bad news from the US seems endless, and it may take a while before markets recover," said Francis Lun, general manager at Fulbright Securities.
Investors dumped shares after stocks plunged on US and European markets overnight, with Wall Street's Dow Jones index ending down 2.9 percent on Tuesday.
The sell-off came after the Institute of Supply Management (ISM) reported that the US services sector shrank last month for the first time in nearly five years.
The ISM non-manufacturing business activity index tumbled to 41.9 last month from 54.4, defying forecasts for a much smaller fall. It was the worst reading since the aftermath of the terrorist attacks on Sept. 11, 2001.
"This is exactly what occurred back in October 2001 when the US moved into recession," said Juliana Roadley, an equities analyst at CommSec in Sydney.
Share prices had regained some stability after a terrible start to the year as Federal Reserve interest rate cuts and a US economic stimulus plan helped to calm jitters about the outlook for the world's largest economy.
But the latest plunges showed that markets remain extremely nervous, making shares vulnerable to any bad news, analysts said.
"Recent expectations that financial markets have hit bottom were reversed in one day," said Kazuya Ito, a fund manager at Daiwa SB Investments. "There is persisting underlying instability in financial markets."
Elsewhere, Manila dropped 1.7 percent and Kuala Lumpur declined 1.5 percent.
"Given that Wall Street tanked last night and there are recession worries again, it's not a huge surprise that Singapore and the other regional markets fell," said Song Seng Wun, regional economist with CIMB-GK Research in Singapore. "That, coupled with many traders going on holiday."
The fresh market rout will inject an additional sense of urgency into this weekend's meeting of finance ministers and central bankers from the Group of Seven rich nations in Tokyo.
But most analysts predict that the G7 will offer little more than words of reassurance to investors over the subprime loan problems that have curbed US economic growth and rattled global markets.
The greenback showed resilience in the face of the unexpectedly weak report on the US service sector, as risk-averse traders looked to the US currency as a safe haven from financial market turmoil, dealers said.
The dollar slipped to ¥106.58 in Tokyo afternoon trade from ¥106.75 in New York late on Tuesday, giving back the previous day's gains.
The euro was little changed at US$1.4647 after US$1.4645.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS