Stocks slide as US election euphoria fades
AFP - 2 hours 17 minutes ago
TOKYO (AFP) - - Asian stocks tumbled Thursday after heavy losses on Wall Street as fears mounted that US president-elect Barack Obama is inheriting an economy sinking deeper into recession.
Dealers said the election party had come to an end as reality dawned that Obama would not take office until January, while markets were eager to see fresh economic stimulus measures as soon as possible.
"Now that the event is over, investors are sobering up and looking at the economic gloom," said Mizuho Investors Securities broker Masatoshi Sato.
"The market is now watching what concrete economic measures his team will roll out. If it takes a long time, funds may move to sell," he warned.
Tokyo's Nikkei stock index tumbled 5.7 percent by lunch while Hong Kong share prices opened 5.1 percent lower. Sydney was 3.3 percent in the red by noon while the Singapore market dropped 4.1 percent.
The sharp falls came after the Dow Jones index slid 5.05 percent on Wall Street on Wednesday as investors braced for a gloomy economic ride after the euphoria of Obama's election victory faded.
"Dismal macroeconomic data and poor corporate results reminded investors that we are only at the start of a deep recession," Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong, wrote in a note.
The euro dropped to 1.2873 dollars in Tokyo morning trade, down from 1.2962 late Wednesday in New York. The dollar was at 98.26 yen after 98.33.
Investors were anticipating further cuts to interest rates on Thursday by both the Bank of England (BoE) and the European Central Bank amid fears of recessions in Europe's biggest economies.
Some economists are even forecasting the BoE would follow up last month's emergency half-point reduction to 4.50 percent with a cut of 100 basis points.
Markets were also looking ahead to crisis talks on the global financial turmoil in Washington on November 15 between leaders of the Group of 20 rich countries and major developing economies.
Leaders will likely agree on an "action plan" including near-term steps to help fix the global economy, a senior US official said Wednesday.
As efforts to contain the financial crisis continued, the International Monetary Fund approved a 16.4 billion dollar loan aimed at rescuing Ukraine.
"The Ukrainian economy , especially the banking system, is experiencing considerable stress," said IMF deputy managing director Murilo Portugal.
Europe's biggest economy, Germany , approved a stimulus package costing 23 billion euros (30 billion dollars) to pump up the ailing economy.
In the US the latest data did nothing to ease gloom over the economic outlook. A report by the Institute for Supply Management showed activity in the services sector shrank more sharply than anticipated in October.
The survey "implies a sharp contraction in the services sector and recession in the overall economy," warned Kowalczyk at CFC Seymour.
A survey showing the US private sector shed 157,000 jobs in October added to worries ahead of official figures due Friday that are expected to show a rise in the jobless rate from a five-year high of 6.1 percent in September.
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