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Asian markets extend world rout on recession fears

(Agencies)
Updated: 2008-11-20 15:27

HONG KONG – Asian stock markets tumbled Thursday, with benchmarks in Japan and Hong Kong both losing more than 5 percent, after fears of a protracted recession sent Wall Street plunging to it lowest point in five years.

Asia's slide extended a global sell-off that accelerated overnight amid lowered projections for U.S. economic activity next year from the Federal Reserve and worries over the fate of America's Big Three automakers, which are pleading for emergency loans from Washington.

A man strolls past a securities' firm in Tokyo, Japan, Thursday, November 20, 2008. Japan's Nikkei 225 fell 315.93 points in early trade following Wall Street plunge. [Agencies]

The uncertainty facing companies around the world was evident after U.S. consumer prices fell 1 percent last month, the largest amount in the past 61 years. While beneficial to consumers, lower prices hurt corporate profits and raise the threat of deflation.

"We've gone past the poor sentiment stage," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong.

"People are looking for any kind of positive and there are just no positives out there. Everyone seems to be united in the depressed global outlook. Whether its commodities or equities, everything seems to be on a downturn," he said.

Tokyo's benchmark Nikkei 225 average lost 534.82 points, or 6.5 percent to 7, 738.40 as Japan posted its second trade deficit in three months on plummeting demand for the nation's exports. Earlier this week, figures showed Japan had slid into a recession in the third quarter, joining Hong Kong and the euro-zone in posting two straight quarters of economic contraction.

Isuzu Motors Ltd. said it will shed 1,400 temporary and part-time manufacturing workers as it scales back production.

With demand shrinking abroad and a surging yen further undercutting company earnings, Japan's exporters and other companies reliant were all heavily in the red. Canon Inc. fell 6.4 percent and Toyota Motor Corp. declined almost 4 percent.

Elsewhere, Hong Kong's Hang Seng Index sank 704.29 points, or 5.5 percent, to 12,111.51, and South Korea's main stock measure lost 6.6 percent.

In Australia, the key benchmark declined 4.2 percent as weakening commodity prices dragged down the country's resource giants like BHP Billiton and Rio Tinto were both down 9 percent or more.

In New York overnight, the Dow Jones industrial average tumbled 427.47 points, or 5.07 percent, to 7,997.28, while the S&P 500 slid 52.54 points, or 6.12 percent, to 806.58. Both closed at their lowest levels since March 2003, and are rapidly approaching the lows of the 2000 to 2002 bear market.

Asian investors pay close attention to U.S. economic and market moves because it is such a huge export market.

Wall Street appeared poised for another bout of selling. Dow futures were down 81 points, or 1 percent, to 7,949, while S&P futures were down 10 points, or 1.2 percent, to 802.5

Oil prices were at their lowest in nearly two years. Light, sweet crude for December delivery lost 84 cents to $52.78 a barrel in Asian trade. Overnight, the contract retreated 77 cents to settle at $53.62 a barrel on the New York Mercantile Exchange, the lowest since January 2007.

In currencies, the dollar weakened to 95.65 yen from 95.88 yen Wednesday. The euro was nearly flat at $1.2495.

In Europe Wednesday, Britain's FTSE 100 slid 4.8 percent, Germany's DAX fell 4.9 percent and France's CAC-40 was off4.0 percent.