Asian Stocks Get Mauled, Japan Bleeds 4.7%
Asian markets tanked Wednesday, sending investors on a selling spree after unexpectedly weak service sector data in the United States and Europe fueled fears of a recession. Japan plunged over 4 percent and Hong Kong closed more than 5 percent lower.
Concern that the U.S. economy is heading for a downturn flared up again after data showed the U.S. services sector slowed in January to levels not seen since the 2001 slump. This sent the Dow Jones Industrial Average plummeting 370 points, or 2.9 percent on Tuesday, its biggest one-day percentage drop in nearly a year. The Nasdaq skidded 73 points, or 3.1 percent, while the S&P 500 tumbled 44 points, or 3.2 percent.
Worries about the fate of U.S. bond insurers also contributed to the selloffs, despite talk of various rescue plans, after Standard & Poor's on Tuesday warned the ratings of U.S. banks could be at risk.
Japan's Nikkei 225 Average finished 4.7 percent lower with exporters such as Advantest hurt by growing fears of a U.S. recession, while a wave of outlook cuts by Japanese companies further dampened market sentiment. Japan's top bank, Mitsubishi UFJ Financial Group, and other bank shares took a beating after Standard & Poor's on Tuesday warned that the ratings of U.S. banks could be at risk.
Hong Kong's Hang Seng Index plunged 5.4 percent in a half-day trading session, the biggest single day percentage fall in just over 2 weeks, as investors tracked sharp losses in overseas markets and cashed out of the market ahead of the Lunar New Year break. China's state-owned aluminum giant Chinalco and its partner Alcoa, which last week surprised markets by taking a 9 percent stake in Rio, said they were analyzing BHP's bid but that there would be no quick reaction. Still, concerns about a pricey counterbid sent shares in Chinalco's listed subsidiary Aluminum Corp of China (Chalco) down 7 percent.
Singapore's FTSE Straits Times Index closed 3.5 percent lower in a shortened session on Wall Street's overnight decline and fears of a U.S. recession. Ship and rig builders fell heavily on worries the weak economic outlook would negatively affect the sector. Cosco, Sembcorp Marine and Yangzijiang closed sharply lower. But Neptune Orient Lines, bucked the market downtrend to end flat. The stock moved off an early low on news of a possible merger with Germany's Tui to form a global container shipping enterprise.
Australian shares shed 3.1 percent on twin worries of a U.S. recession and higher domestic interest rates, while BHP Billiton fell after announcing a formal offer for Rio Tinto. Shares in Macquarie Group plummeted over 8 percent, after the Australian investment bank named Nicholas Moore as its new chief executive, and reiterated it had no unusual trading exposures arising from the global credit market turmoil.