Asia stocks drop, haunted by global growth fears
Saturday, July 26, 2008
ASIAN stocks fell sharply yesterday, halting a four-day rally, after weak US housing and jobs data and volatility in the financial sector once again reminded investors of the fragile state of the global economy.
Japan's Nikkei share average fell two per cent and European stocks opened as much as one per cent lower.
Oil rose from a seven-week low to around US$125.95 a barrel, though the view that US energy demand is deteriorating is keeping a lid on prices.
The US dollar fell against the yen and Swiss franc, two currencies associated with stability in times of market turbulence, while Japanese government bond prices rose as concerns about the global economy resurfaced.
Reports overnight fuelled fears Britain, the euro zone, Japan and the United States are sliding toward recession. German business sentiment this month suffered its biggest decline since the 2001 attacks in New York and Washington, while existing US home sales were the lowest in a decade.
"With the continuing deceleration in the global economic backdrop, export-dependent Asian economies in general are poised for weaker growth," said Thomas Lam, senior Treasury economist with UOB in Singapore.
"The negative spillover from the major economies on Asian growth tends to occur with a lag," Lam said, adding that weak US growth late last year is being felt in Asia only now.
Shares in the Asia-Pacific region excluding Japan dropped 2.6 per cent after hitting the highest level in more than three weeks the previous day, an MSCI index shows. It is down 20 per cent this year.
Hong Kong's Hang Seng index slipped 1.9 per cent. China Shenhua Energy fell 6.3 per cent and was the biggest decliner in the index after Beijing announced stricter price controls on thermal coal used by power plants.
South Korea's Kospi slid 1.7 per cent
Australia's benchmark index fell 3.4 per cent, dragged down by a slide in National Australia Bank Ltd . NAB shares fell as much as 14.6 per cent to A$26.22 before ending down 13.5 percent, their biggest one-day percentage fall since October 1987.
As the MSCI Asia ex-Japan benchmark index looks likely to post its best week since May, some investors might be asking whether markets are near a bottom. Reuters
Japan's Nikkei share average fell two per cent and European stocks opened as much as one per cent lower.
Oil rose from a seven-week low to around US$125.95 a barrel, though the view that US energy demand is deteriorating is keeping a lid on prices.
The US dollar fell against the yen and Swiss franc, two currencies associated with stability in times of market turbulence, while Japanese government bond prices rose as concerns about the global economy resurfaced.
Reports overnight fuelled fears Britain, the euro zone, Japan and the United States are sliding toward recession. German business sentiment this month suffered its biggest decline since the 2001 attacks in New York and Washington, while existing US home sales were the lowest in a decade.
"With the continuing deceleration in the global economic backdrop, export-dependent Asian economies in general are poised for weaker growth," said Thomas Lam, senior Treasury economist with UOB in Singapore.
"The negative spillover from the major economies on Asian growth tends to occur with a lag," Lam said, adding that weak US growth late last year is being felt in Asia only now.
Shares in the Asia-Pacific region excluding Japan dropped 2.6 per cent after hitting the highest level in more than three weeks the previous day, an MSCI index shows. It is down 20 per cent this year.
Hong Kong's Hang Seng index slipped 1.9 per cent. China Shenhua Energy fell 6.3 per cent and was the biggest decliner in the index after Beijing announced stricter price controls on thermal coal used by power plants.
South Korea's Kospi slid 1.7 per cent
Australia's benchmark index fell 3.4 per cent, dragged down by a slide in National Australia Bank Ltd . NAB shares fell as much as 14.6 per cent to A$26.22 before ending down 13.5 percent, their biggest one-day percentage fall since October 1987.
As the MSCI Asia ex-Japan benchmark index looks likely to post its best week since May, some investors might be asking whether markets are near a bottom. Reuters
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