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.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS