US Recession Fears Sink Asia, Japan Sheds 3%
Asian markets dropped sharply Monday as a nasty earnings surprise from General Electric and a 26-year low in U.S. consumer sentiment drowned out the Group of Seven nation's support for the U.S. dollar.
But the dollar's gain helped to push U.S. crude oil back below $110 a barrel. Prices for gold fell 1 percent to $917.10/7.90 an ounce as the dollar's rise outweighed buying of the safe-haven asset.
In the biggest shock yet to the U.S. industrial sector from the credit fallout, GE, which is viewed as an economic bellwether because of the range of its businesses, posted an unexpected 6 percent fall in profit. Meanwhile, data showed that consumer sentiment in early April fell to it lowest level in 26 years, adding to signs that the U.S. economy is in recession.
Tokyo's Nikkei 225 Average fell 3 percent, with exporters such as Canon and Sony hit by a stronger yen and further evidence the United States may be in recession. Wireless carrier KDDI tumbled more than 7
percent after cutting its profit forecast, becoming the biggest drag on the Nikkei.
South Korea's KOSPI was finished 1.85 percent lower on revived U.S. recession worries, with POSCO down 6.5 percent on concerns rising costs of input materials would dent its profit margins.
Australia shares fell 1.8 percent to a two-week low, with financial firms such as National Australia Bank and resource firms leading declines on further signs that the U.S is in recession.
China's Shanghai Composite Index tumbled 5.6 percent, led by property shares, in response to weak foreign stock markets and concern about inflation and growth trends in the Chinese economy. Poly Real Estate Group plunged its 10 percent daily limit and the biggest listed property developer, Vanke, lost over 9 percent. Analysts said weekend comments by officials and economists at the Boao Forum for Asia in southern China indicated the country still faced a serious threat from inflation and a possible economic slowdown because of the U.S. credit crisis.
Hong Kong tracked overseas losses to fall 3.5 percent, with financial plays leading the slide on concern that Chinese economic data this week could trigger another round of austerity measures by Beijing. China-backed and Hong Kong-incorporated and listed red chip companies were also in focus after a report said China had called for a halt to A-share listings of China-backed red chips in Shanghai.