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Asian, European markets stall after 2-day rally
(Agencies)
Updated: 2008-10-15 17:24 HONG KONG - Asian and European stock markets declined Wednesday after a two-day rally, tracking Wall Street lower amid concerns that worldwide efforts to revive the financial system won't be enough to stave off a recession. Hong Kong's Hang Seng Index lost 834.58 points, or nearly 5 percent, to 15,998.30 after rising more than 13 percent the previous two days. Markets in Australia, South Korea, China, India and Singapore also sank.
Japan's Nikkei 225 index bucked the trend, however, paring its losses to end up 1.1 percent at 9,547.47. The benchmark soared 14 percent in the previous session -- its biggest single-day gain ever. As trading opened in Europe, key indices in Britain, Germany and France retreated about 2 percent each. Russia's RTS fell over 4 percent. The pull back followed US markets, where key benchmarks fell after President George W. Bush announced the government would use part of the $700 billion financial bailout to pump capital into major banks and help get lending flowing again. European governments are investing about $2 trillion in their own ailing banks. Despite the measures, worries about the global economy and company profits were still weighing heavily on markets, analysts said. "We had a huge rally on Monday and Tuesday, so there has to be some profit-taking," said Dariusz Kowalczyk, chief investment strategist for CFC Seymour in Hong Kong. "There's also more clarity about damage to the economy, and investors are likely to conclude that the rally at the beginning of the week overstates the potential for earnings." As the markets dropped, regional leaders continued to grapple with the financial crisis and its impact on local economies. A day after announcing billions in new spending to protect Australia's economy, Prime Minister Kevin Rudd accused Wall Street of "obscene failures" in corporate governance and blamed "extreme capitalism" for turmoil. In Hong Kong, Chief Executive Donald Tsang said the meltdown was even worse than the 1997 Asian financial crisis and would take a far bigger toll on the global economy. Asian stocks, even after the recent surge, are down sharply since the crisis escalated last month. Since Sept. 12, the last session before US investment bank Lehman Brothers Inc. collapsed, the Nikkei has lost 22 percent and the Hang Seng has shed 17 percent. Australia's benchmark is down about 12 percent. In Wednesday trade, resource issues took a hit on worries about slowing demand. Shares in Posco, the world's fourth-largest steelmaker, lost almost 8.7 percent in South Korea. BHP Billiton Ltd, Australia's largest oil and gas producer, sank more than 4 percent. Major exporters such as Japanese automakers slumped due to concerns over the US economy, a vital market for Asian goods. Honda Motor Co. shed 5.23 percent, and Toyota Motor Corp. lost 1.88 percent. Overnight, the Dow Jones industrial average fell 76.62, or 0.82 percent, to 9,310.99. US stock futures dropped. Dow futures were down 62 points, or 0.7 percent, to 9,299, while Nasdaq futures were down 1.25 points, or 0.1 percent, to 1,364. Oil slipped. Light, sweet crude for November delivery fell to $77.79 a barrel in Asian trade, down 84 cents. The dollar weakened to 101.36 yen. The euro slightly higher at $1.3602. Asian lending rates continued to ease, suggesting banks might be growing more willing to lend money to one another after credit seized up in recent weeks because of fears that companies would have trouble repaying. On Wednesday, the Hong Kong interbank offered rate, known as Hibor, for three-month loans declined further to around 4.34 percent from 4.42 percent. The Singapore rate for three-month US dollar loans softened to 4.57 from 4.66. London's interbank offered rate, or Libor, for three-month dollar loans fell to 4.64 percent from 4.75 percent the day before. |
