Stocks weak, US$ tumbles on economy concerns
Saturday, March 1, 2008
STOCKS fell and the US dollar tumbled to historic lows yesterday as the Federal Reserve's warning on the health of domestic banks raised concerns over a US recession, driving oil and safe-haven gold to record peaks.
Fed chairman Ben Bernanke said on Thursday some small US banks could fail during the current market turmoil stemming from the fallout in US subprime mortgages, in remarks which fanned expectations for an aggressive interest rate cut in March.
However, Bernanke also acknowledged inflation could complicate the central bank's effort to spur the economy, which weighed on risky assets.
"The market still looks very nervous. The banks are still the key talking point," said Keith Bowman, analyst at Hargreaves Lansdown.
"We've seen some ramification of (Bernanke's) comments in the continuing weakness of the dollar."
The FTSEurofirst 300 index was down 1.4 per cent on the day, hitting a one-week low. The MSCI main world equity index fell 0.7 per cent.
Asian stocks closed mostly lower yesterday as Wall Street's weakness, record oil prices and a weak US dollar — which makes regional exports more expensive — weighed heavily on sentiment.
Tokyo slumped 2.32 per cent and Sydney and Seoul each falling 1.4 per cent.
The prospect of lower US interest rates failed to halt the slide in Singapore which was down 1.55 per cent, Kuala Lumpur eased 0.80 per cent and Jakarta was down 1.3 per cent. Mumbai was down 1.38 per cent.
Hong Kong was off 1.1 per cent while Taipei was down a milder 0.58 per cent, but Shanghai rose 1.14 per cent.
Bangkok also bucked the broader trend and was up 0.43 per cent as the Thai central bank ditched the last of its currency controls imposed after the 2006 coup. Improved corporate results lifted Manila by 0.6 per cent.
The US dollar fell to a three-year low of ¥104.08, hit record lows of US$1.5238 per euro and tumbled to historic troughs against a basket of major currencies.
"Mr Bernanke identified the main economic risks as the credit crunch, employment and the housing market. Don't expect good news from any of these directions soon. The rise in inflation complicates the Fed's job. However, growth worries are in the driving seat," BNP Paribas said in a note to clients.
Reuters, AFP
Fed chairman Ben Bernanke said on Thursday some small US banks could fail during the current market turmoil stemming from the fallout in US subprime mortgages, in remarks which fanned expectations for an aggressive interest rate cut in March.
However, Bernanke also acknowledged inflation could complicate the central bank's effort to spur the economy, which weighed on risky assets.
"The market still looks very nervous. The banks are still the key talking point," said Keith Bowman, analyst at Hargreaves Lansdown.
"We've seen some ramification of (Bernanke's) comments in the continuing weakness of the dollar."
The FTSEurofirst 300 index was down 1.4 per cent on the day, hitting a one-week low. The MSCI main world equity index fell 0.7 per cent.
Asian stocks closed mostly lower yesterday as Wall Street's weakness, record oil prices and a weak US dollar — which makes regional exports more expensive — weighed heavily on sentiment.
Tokyo slumped 2.32 per cent and Sydney and Seoul each falling 1.4 per cent.
The prospect of lower US interest rates failed to halt the slide in Singapore which was down 1.55 per cent, Kuala Lumpur eased 0.80 per cent and Jakarta was down 1.3 per cent. Mumbai was down 1.38 per cent.
Hong Kong was off 1.1 per cent while Taipei was down a milder 0.58 per cent, but Shanghai rose 1.14 per cent.
Bangkok also bucked the broader trend and was up 0.43 per cent as the Thai central bank ditched the last of its currency controls imposed after the 2006 coup. Improved corporate results lifted Manila by 0.6 per cent.
The US dollar fell to a three-year low of ¥104.08, hit record lows of US$1.5238 per euro and tumbled to historic troughs against a basket of major currencies.
"Mr Bernanke identified the main economic risks as the credit crunch, employment and the housing market. Don't expect good news from any of these directions soon. The rise in inflation complicates the Fed's job. However, growth worries are in the driving seat," BNP Paribas said in a note to clients.
Reuters, AFP
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