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Business

Asian stocks follow Wall Street's plunge

Video by Yuka ROYER

Text by AFP

Latest update : 2008-11-21

Asian stocks were hammered again on Friday, a day after European and US stocks closed at disastrous levels. Meanwhile fresh job cuts worldwide and the deepening woes of the US automobile sector also added to investor gloom.

Asian stocks were hammered again Friday after a rout on Wall Street, where weak US economic data and the deepening woes of the Big Three automakers added to investor gloom.
  
Markets struggled to see light at the end of the tunnel after Wall Street's Dow Jones Industrial index sank to the lowest level in five-and-a-half years, following what one analyst called "one car crash after another" for markets.
  
"Whether through panic, speculation, fear or the forced unwinding of positions, we are witnessing mass selling on every level," said GFT derivatives head Martin Slaney in Australia.
  
"The risk of global economic recession is deepening by the day. The prospect of The Great Depression Two is a genuine one and is plain scaring investors."
  
Japan's Nikkei lost 2.2 percent by lunch, a day after falling 6.7 percent. Stocks slid 3.1 percent in Seoul, 3.0 percent in Sydney, 4.4 percent in Shanghai and 3.9 percent in Hong Kong.
  
"Market players no longer have high expectations for further monetary or financial measures" to tackle the economic crisis, said Seiichi Suzuki, a strategist at Tokai Tokyo Securities in Japan.
  
Investors were unnerved by news that Democrats in Congress had put off a vote on a bailout for crisis-hit US automakers until at least December, and ordered industry chiefs to come up with a new restructuring plan.
  
"The delayed action on a US bailout deal for the Big Three automakers is a significant for markets," said Suzuki. "A bailout deal for the auto industry may help it to survive a bit longer but it would not be a cure-all remedy."
  
Democrats said the chief executives of the Big Three, criticised for flying to Washington on luxury corporate jets to plead for financial rescue, had not convinced them they could restructure their reeling companies.
  
"Until they show the plan, we cannot show them the money," House speaker Nancy Pelosi told reporters.
  
The decision to delay a possible multi-billion dollar rescue for the crippled industry rattled Wall Street, where the Dow Jones Industrial Average plunged 5.56 percent overnight.
  
The Wall Street Journal reported on its website that Citigroup executives  are considering selling part of all of the troubled US financial giant.
  
The US economy appeared to worsen as weekly jobless claims shot up to a 16-year high, raising fears of a deep recession.
  
Investors are worried about the hazy outlook for further steps to tackle the worst financial crisis in decades because president-elect Barack Obama will not take office until late January.
  
"We are at a very difficult time for markets when the US administration is shifting," said Shinichi Ichikawa, chief equity strategist in Tokyo for Credit Suisse.
  
"We cannot expect at this time that either the outgoing president or the president-elect will come up with a policy that shows his strong intention to improve the economy fundamentally."
  
In Peru, 21 Asia-Pacific economies making up half of world commerce warned against protectionism and urged a quick breakthrough in the World Trade Organization negotiations to beat the financial crisis.
  
In Japan, investors were waiting for an interest rate decision by the central bank, three weeks after cutting the country's super-low interest rates for the first time in seven years to try to pump up the economy.
  
Analysts see little chance of another rate cut this week from the current level of just 0.3 percent after warnings from the central bank chief about the risks of very low borrowing costs.

Date created : 2008-11-21

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