Global stock markets tumbled on Friday as fears mounted of a collapse of the Big Three US automakers after the US Senate refused to throw them a financial lifeline, traders said.
Share prices plunged in Asia and at the start of European trade after hours of late-night negotiations among US senators on a bailout of the troubled industry collapsed.
The US dollar in turn fell sharply, hitting a 13-year low against the yen.
PHOTO: AP
“It’s a very bad sign. US stocks will likely nosedive,” said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC.
Wall Street will reopen at 1430 GMT after losing 2.24 percent on Thursday.
Tokyo’s Nikkei index slumped by more than 7 percent at one point as the dollar tumbled below the key ¥90 level for the first time since 1995.
The Japanese benchmark ended down 5.6 percent as exporters reeled from the stronger yen, which undercuts their overseas earnings.
Hong Kong shares closed down 5.48 percent, Seoul dived 4.38 percent and Sydney was off 2.4 percent.
Elsewhere in the Asia-Pacific yesterday, Taipei ended down 3.7 percent, Shanghai closed down 3.81 percent, Wellington lost 1.8 percent and Manila dropped 2.0 percent.
In early European trade, London dived 4.07 percent, Frankfurt tumbled 4.16 percent, Paris lost 4.74 percent, Madrid gave up 3.93 percent and Zurich lost 3.91 percent.
A US$14 billion deal passed the House of Representatives this week but it faced stiff opposition from senators in US President George W. Bush’s Republican Party.
“I’m terribly disappointed that we are not able to arrive at a conclusion,” said Senate Majority Leader Harry Reid, a member of president-elect Barack Obama’s Democratic Party. “We have tried very, very hard to arrive at a point where we could legislate for the automobile industry.”
Japan was also reportedly set today to raise its own stimulus package to ¥40 trillion (US$437 billion) from ¥26.9 trillion as the outlook rapidly worsens in Asia’s largest economy.
Investors reacted cautiously to the reports, noting that Prime Minister Taro Aso — who unveiled a ¥26.9 trillion boost in late October — is struggling amid voter discontent with his handling of the economy.
Aso “is already a lame duck,” said Hideaki Higashi, a strategist at SMBC Friend Securities. “We do not know how seriously we should believe the reported measures would be implemented.”
In China, shares closed down 3.81 percent yesterday due to concerns about weak fourth quarter earnings and Beijing’s lack of new economy-boosting measures, dealers said.
China’s retail sales growth eased to 20.8 percent last month from 22.0 percent in October, reinforcing concerns that consumption in the world’s fourth-largest economy was slowing.
“Many investors chose to sell as China’s economy has shown clear signs of further slowdown, and corporate earnings in the fourth quarter will be poor,” TX Investment’s Wu Feng said.
The benchmark Shanghai Composite Index, which covers A and B shares, closed down 77.47 points at 1,954.22 on turnover of 73.4 billion yuan (US$10.7 billion).
In New York on Thursday, the Dow Jones Industrial Average slid 2.24 percent as investors fretted over the rescue plan for the troubled US auto industry.
Market nervousness was reinforced by news that US jobless claims in the past week soared to a fresh 26-year high of 573,000, well above expectations.
There was also disappointment that the trade deficit widened 1.1 percent in October to US$57.2 billion, with both exports and imports down, suggesting demand is falling worldwide.
The sharp drop on Asian markets wiped out several days of gains. Japan’s Nikkei index is now down 46.5 percent this year while Hong Kong’s Hang Seng is off almost 48 percent.
ANNOUNCEMENT: People who do not comply with the ban after a spoken warning would be reported to the police, the airport company said on Friday Taoyuan International Airport Corp on Friday announced that riding on vehicles, including scooter-suitcases (also known as “scootcases”), bicycles, scooters and skateboards, is prohibited in the airport’s terminals. Those using such vehicles should manually pull them or place them on luggage trolleys, the company said in a Facebook post. The ban intends to maintain order and protect travelers’ safety, as the airport often sees large crowds of people, it said, adding that it has stepped up publicity for the regulation, and those who do not comply after a spoken warning would be reported to the police. The company yesterday said that
NEW YEAR’S ADDRESS: ‘No matter what threats and challenges Taiwan faces, democracy is the only path,’ William Lai said, urging progress ‘without looking back’ President William Lai (賴清德) yesterday urged parties across the political divide to democratically resolve conflicts that have plagued domestic politics within Taiwan’s constitutional system. In his first New Year’s Day address since becoming president on May 20 last year, Lai touched on several issues, including economic and security challenges, but a key emphasis was on the partisan wrangling that has characterized his first seven months in office. Taiwan has transformed from authoritarianism into today’s democracy and that democracy is the future, Lai said. “No matter what threats and challenges Taiwan faces, democracy is the only path for Taiwan,” he said. “The only choice
CORRUPTION: Twelve other people were convicted on charges related to giving illegal benefits, forgery and money laundering, with sentences ranging from one to five years The Yilan District Court yesterday found Yilan County Commissioner Lin Zi-miao (林姿妙) guilty of corruption, sentencing her to 12 years and six months in prison. The Yilan District Prosecutors’ Office in 2022 indicted 10 government officials and five private individuals, including Lin, her daughter and a landowner. Lin was accused of giving illegal favors estimated to be worth NT$2.4 million (US$73,213) in exchange for using a property to conduct activities linked to the 2020 Chinese Nationalist Party (KMT) presidential and legislative election campaigns. Those favors included exempting some property and construction firms from land taxes and building code contraventions that would have required
TECH CORRIDOR: Technology centers and science parks in the south would be linked, bolstering the AI, semiconductor, biotech, drone, space and smart agriculture industries The Executive Yuan yesterday approved a “Southern Silicon Valley” project to promote the development of an artificial intelligence (AI) and semiconductor industry in Chiayi County, Tainan, Pingtung County and Kaohsiung. The plan would build an integrated “S-shaped semiconductor industry corridor” that links technology centers and science parks in the south, Executive Yuan spokesperson Michelle Lee (李慧芝) said yesterday after a Cabinet meeting. The project would bolster the AI, semiconductor, biotech, drone, space and smart agriculture industries, she said. The proposed tech corridor would be supported by government efforts to furnish computing power, workforce, supply chains and policy measures that encourage application and integration
RSS