Asian stocks take new plunge
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Japan's and Hong Kong's stock indexes tumbled more than five percent in early afternoon trade on Thursday, hit by a raft of gloomy economic and corporate news.
AFP - Asian stocks fell sharply in early trade Thursday, tracking heavy losses in the United States and Europe following another deluge of grim economic and corporate news.
A record fall in Japanese machinery orders provided a stark illustration of the fallout of the US-born credit crunch for Asia's economies.
Apple chief Steve Jobs's announcement that he is taking medical leave of absence because of "complex" health issues raised worries about the future of the iconic company and set Wall Street up for a rocky start, dealers said.
Tokyo's Nikkei index was down 3.98 percent by the lunch break while Hong Kong opened 4.7 percent lower.
Japan's core machinery orders, a closely watched barometer of corporate capital spending, plunged by 16.2 percent in November from the previous month, the fastest drop on record, official data showed.
"On top of the bearish mood carried over from the US and European markets, machinery orders data turned out to be much weaker than expected, fuelling the incentive to sell," said SMBC Friend Securities strategist Hideaki Higashi.
Market optimism at the start of the year over president-elect Barack Obama's plans to jump-start the flagging US economy have now been eclipsed by fears of corporate bankruptcies and weak earnings due to the economic crisis.
Nissan Motor Co. shares lost more than four percent after a local newspaper reported Japan's third largest automaker expects to post an annual operating loss because of weak sales and a stronger yen.
Elsewhere in the region, Shanghai dropped 0.65 percent, Seoul tumbled 4.1 percent and Sydney lost 3.4 percent. Australian unemployment rose to 4.5 percent in December, the highest level in almost two years.
"Any of the New Year optimism has been brushed away this week," Jeremy Hook, a client advisor at TMS Capital in Sydney, told Dow Jones Newswires.
"Last week everyone thought ripping up the old calendar would help the mood of the market, but they have had a rude awakening," he said.
A fresh wave of selling hit US and European stock markets Wednesday as an unrelenting flow of bad economic and corporate news sparked fears of a deepening global downturn.
US retail sales in December plunged 2.7 percent, more than twice market forecasts, as consumers tightened purse strings amid the deepening recession.
Investors were alarmed by news of a bankruptcy filing in US and Canadian courts by telecom giant Nortel, as well as a slew of earnings warnings in the banking sector. US mobile phone maker Motorola announced 4,000 job cuts.
Wall Street's Dow Jones Industrial Average slid 2.95 percent, extending a losing streak to a sixth session.
In Europe on Wednesday, the London FTSE 100 slumped 4.97 percent to 4,180.64, the Paris CAC 40 index dropped 4.56 percent and the Frankfurt DAX lost 4.63 percent.
"The equity risk premium remains high across markets as investors await a turnaround in macro fundamentals," Nomura strategist Sean Darby said.
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