World Markets Fall Over American Loan Fears
TOKYO -- Asian stocks hit their lowest levels in months Thursday - and European stocks followed in early trade - battered by persistent anxiety over American housing loan problems and potential damage to global financial markets.
The benchmark Nikkei 225 index closed down nearly 2 percent on the Tokyo Stock Exchange after falling below the key 16,000-point mark the first time since November. South Korea's main benchmark fell 6.9 percent to its lowest finish since May, and Hong Kong's blue chip Hang Seng Index dropped 3.3 percent to its lowest close in two months.
Meanwhile, European stock indices dropped in morning trade, with Britain's FTSE and France's CAC-40 down 2.69 percent, and Germany's DAX down 2.4 percent.
Repercussions in Asian markets were bigger compared with the loss of 1.3 percent overnight in America - where the loan problems erupted - with at least three Asian markets losing more than 6 percent on the day.
That's because of uncertainty over the size of impact on corporate earnings and the regional economy, said Shinichi Ichikawa chief strategist at Credit Suisse. He said the weakness of the dollar and the euro also fueled concern.
"The issue of the subprime loans is not just the problem of that sector but it also affects many related financial products, (and) the size of a possible damage or other details are not clear, and that's why investors are feeling uneasy," Ichikawa said.
"All of Asia and other European markets are watching the U.S. market," said James Soh, a strategist at Korea Investment & Securities Co. in Seoul. Global investors were focused in particular on the American Federal Reserve, he said.
The Federal Reserve added more cash to the American banking system Wednesday, and other central banks have been pouring cash into their banking systems as well since the end of last week. The cash infusions appear to have done little to halt a global slide.
Some investors have been calling for the American central bank to free up more cash by making an interest rate cut at its Sept. 18 meeting, but the Fed has given no indication that it will.
The Bank of Japan injected 400 billion yen ($3.4 billion) into money markets Thursday morning, the third time since last Friday it has acted to curb rises in a key overnight interest rate.
Despite those measures, banking issues took a beating in Tokyo on global credit concerns. Sumitomo Mitsui Financial Group was off nearly 6 percent at midday.
Later Thursday, New Zealand's central bank said it is closely monitoring domestic market movements and stands ready to inject liquidity if needed.
New Zealand's benchmark NZX-50 fell 1.2 percent Thursday to close at 3,957.94, its fifth loss in five days.
Australia's benchmark S&P/ASX 200 index closed 1.3 percent lower after trimming early losses.
Stocks plunged everywhere in Asia.
The Philippine benchmark closed down 6.0 percent after crashing through the 3,000-mark. Indonesia's standard stock index shed 7.7 percent on the day. Taiwan's main stock index closed down 4.6 percent, China's main index in Shanghai fell 2.1 percent, and Singapore's Straits Times Index fell 3.7 percent. India's Sensex 30-stock benchmark index was down 3.9 percent midday after plunging more than 4 percent shortly after opening.
Wednesday in America the Dow Jones industrial average fell 1.29 percent overnight to 12,861.47, closing below 13,000 for the first time since April 24.
