Slowdown fears send Asia markets lower
HONG KONG » Stocks fell around the world yesterday, led by Asian exchanges, as concerns about a slowing global economy weighed heavily on the markets. Oil prices declined sharply as Hurricane Gustav weakened, but investors were still waiting to see how much damage the storm might do to Gulf Coast oil operations.
In Asia, South Korean shares were hardest hit, with the Korea Composite Stock Price Index plummeting 4.1 percent to 1,414.43 - its lowest level in 17 months - amid multiyear weakness in the country's currency.
Japan's Nikkei 225 index, meanwhile, lost 1.83 percent to 12,834.18 as investors cashed in recent gains and Friday's drop on Wall Street darkened the near-term outlook.
Taiwan's benchmark plunged 3.3 percent, hurt by concerns about the country's electronics industry in the face of slowing world economic growth. Other stock measures in Shanghai, Hong Kong and Singapore also retreated.
In Europe, stocks fell more modestly. Britain's FTSE 100 closed down 0.60 percent at 5,602.80, Germany's DAX fell 0.01 percent to 6,421.80 and France's CAC slipped 0.23 percent to 4,472.13. The markets often take cues from Wall Street, but U.S. exchanges were closed for Labor Day.
Global investors were uneasy after the U.S. on Friday released figures showing decreasing personal incomes and weak consumer spending - suggesting softer demand for foreign goods in the world's largest economy.
Oil prices also topped concerns as Hurricane Gustav churned along the Gulf Coast, where oil companies had shut down drilling and refining operations. However, signs that Gustav was weakening eased some of investors' uneasiness as the day wore on. While crude had risen $2.79 to $118.25 in electronic trading on the New York Mercantile exchange early in the day, it later retreated dramatically to trade at $111.12 a barrel, down $4.34 from Friday's settlement.
Although oil has fallen substantially since hitting a record of $147.27 in July, it remains very expensive and a drag on economies.
"There's not much positive news. We have slowing down in the U.S and higher oil prices. So investors are clearly still worried," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.
Across Asia, companies that depend on the U.S. and other export markets took a beating, with cautious comments from computer maker Dell Inc. weighing on the technology sector.
Yesterday's decline in Tokyo largely erased gains last week when the Nikkei broke 13,000, considered by some investors to be a key level for judging market sentiment.
"There was a feeling that the market went to far when it hit 13,000, and today was a reaction to that, especially given weaker U.S. stocks and the yen's gain (against the dollar)," said Yutaka Miura, a senior strategist at Shinko Securities Co.