Asian Stocks Slide on Economic Woes

Asian markets came under heavy selling on Tuesday, depressed by sharp falls in the key Wall Street indices overnight after U.S. data showed factory activity fell to its weakest since 1982 and Federal Reserve Chairman Ben Bernanke said the U.S. economy remained under considerable strain.

The Dow plunged 679.95 points, or 7.7%, after gaining more than 1,200 points in the prior five sessions. The S&P 500 index plummeted 8.9%, marking the worst one-day drop for the Dow and S&P since mid-October. The tech-laden Nasdaq also lost 9% amid fears about the impact of the slowdown on tech spending.

Asian traders also took in the sobering news that the U.S., the world's largest economy, is officially in recession and has been in that state since December 2007, as declared by The National Bureau of Economic Research.

The Nikkei 225 Average tumbled 6.4 percent at the Tuesday close, while the broader Topix Index gave up 4.9 percent, weighed down by Honda Motor and other exporters on the back a stronger yen. Kyocera and other high tech issues like TDK Corp were hammered in line with their U.S. peers after a report showed global semiconductor sales fell 2.4 percent in October. Trading houses also proved a drag on the market, with Mitsubishi Corp down by 10.1 percent this session, while fellow trader Itochu lost 12.2 percent at the finish line.

Seoul shares closed 3.4 percent lower as the market digested news the U.S. economy, officially in recession, could be in for a long and deep downturn. The index's tech heavyweights such as Hynix Semiconductor and Samsung Electronics retreated in tandem with their U.S. peers. Shares of Ssangyong Engineering & Construction plunged on a local media report that the country's third-biggest steelmaker Dongkuk Steel Mill, has withdrawn its bid with a consortium to buy a controlling stake in the firm.

Australian stocks lost 4.2 percent, led by falls in resource stocks such as BHP Billiton and Rio Tinto amid worries that a global economic downturn will dent demand for metals. Financials also came under pressure, with Macquarie down 13 percent. The Reserve Bank of Australia cut its key interest rate again, this time by 1 percentage point to 4.25 percent at its policy meeting Tuesday, as the central bank moved aggressively to shore up its domestic economy.   But retailers such as Harvey Norman and David Jones bucked the downward trend, boosted by data showing surprisingly strong retail sales in October.

Hong Kong's Hang Seng Index plunged 5 percent amid signs of a deepening economic slump. Financials and telecom stocks retreated. Property plays also fell, as investors locked in profits following recent gains amid expectations that easing interest rates would boost sales. 

China's key Shanghai Composite Index defied the poor showing in Asian markets to close only 0.3 percent lower. Hopes of strong economic stimulus measures from the central government helped sentiment. Consumers and industrial shares gained ground, with Guangdon Midea Electric Appliances climbing. But Chinese financials such as China Life Insurance stayed weak.

In South-east Asia, Thailand's SET reversed gear to close 0.9 percent lower after the country's Constitutional Court ordered the ruling PPP party to be disbanded after it was found guilty of  fraud. The court also barred the prime minister and top party leaders from politics for five years.

Singapore's STI shed 3 percent while Malaysia's KLCI lost 0.3 percent.

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