Mounting fears about tattered government finances in Europe drove the euro down and hammered stock markets across Asia yesterday following New York’s worst finish since November.
The European currency sank to an eight-month low with risk-averse investors bolting for the safe-haven dollar, despite concern that US jobs data out later in the day would flag enduring weakness in the world’s largest economy.
“What we’re seeing is a wave of panic selling,” said Francis Lun (藺常念), general manager at Fulbright Securities (富昌證券) in Hong Kong, where the Hang Seng index tumbled below the key 20,000 level for the first time in five months.
PHOTO: REUTERS
The euro dropped to 1.3670 dollars at one point, the lowest level since late last May. In Tokyo afternoon trade it stood at 1.3707, from 1.3726 in New York late on Thursday.
“European debt concerns have strengthened the US dollar and this has stoked concerns that ... risk aversion may heighten further,” Min Sang-il of E*Trade Securities in South Korea told Dow Jones Newswires.
Hong Kong’s Hang Seng Index dived 676.56 points to end at 19,665.08. Singapore’s Straits Times Index was down 1.95 percent.
Tokyo plummeted 2.89 percent, or 298.89 points, to end at 10,057.09.
Seoul ended 3.05 percent, or 49.30 points, down at 1,567.12. In Australia, the S&P/ASX200 plunged 2.32 percent to end at 4,514.3.
The European currency was hit by increased fears that crisis-hit EU members such as Spain and Portugal could be in for the same troubles as debt-ridden Greece.
It was also weighed by the European Central Bank’s decision to maintain record-low interest rates.
“A spike in risk aversion following renewed concerns about the health of European sovereigns saw equity markets pummeled,” NAB Capital analysts wrote in a note to clients.
“It’s very bad sentiment for the euro, it’s a sell-off for the euro definitely,” said Lee Sue Ann, a treasury economist with Singapore’s United Overseas Bank.
Ben Potter, IG Markets strategist in Australia, said: “It seems the problems in Europe are only deepening.”
The shockwaves across Asia came after Wall Street’s Dow Jones index dived 2.61 percent to end at 10,002.18 on Thursday, its lowest since November, after a brief dip below 10,000.
In advance of yesterday’s US Labor Department survey of non-farm payrolls, weak data on US jobless claims combined with heightened fears of debt problems in EU countries to drive investors away from equities.
Chinese shares closed down 1.87 percent as banks and energy stocks were hardest hit by renewed recovery concerns, dealers said.
The Shanghai Composite Index, which covers both A and B shares, was down 55.91 points at 2,939.40 on turnover of 110.9 billion yuan (US$16.2 billion).
“Jittery investors are now focused on the external factors, another whammy for the market after domestic credit tightening concerns were priced in during the recent correction,” Guotai Junan Securities (國泰君安證券) analyst Ci Weixiang said.
Oil reversed earlier losses as dealer made the most of cheaper prices. New York’s main contract, light sweet crude for March delivery, rose US$0.27 to US$73.41 a barrel. The benchmark had plunged nearly US$4 in New York Thursday.
Brent North Sea crude was up US$0.13 to US$72.26 after dropping US$3.79 in London.
Hong Kong gold opened at US$1,064 to US$1,065 an ounce, down from Thursday’s close of US$1,105.50 to US$1,106.50.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue