Asian markets sag on Wall Street woes

Click to follow
The Independent Online

Asian stock markets opened the week broadly lower, losing ground Monday after investors in the region were rattled by a big drop on Wall Street on fears that US share prices could slide further.

Asian stock markets opened the week broadly lower, losing ground Monday after investors in the region were rattled by a big drop on Wall Street on fears that US share prices could slide further.

In Europe, most stock market indexes dropped by more than 1% early on Monday, following an even steeper drop on Friday. They are now at their lowest level for months.

The FTSE index of leading London shares was down by 87 points in the first hour of trading to 5820, less than 50 points from its low for the year.

At noon, the FTSE 100-share index was down 42.6 points at 5,864.7.

New York's decline "has certainly been the single biggest factor driving the market at the moment," said Toshihiko Matsuno, deputy manager of the investment advisory office at Tokyo's Yamatane Securities Co.

On Wall Street last week, the Dow Jones industrial average fell 630.05 points, or 5.9 percent, to close Friday at 10,019.71, largely on fear that emerging signs of inflation will force the US Federal Reserve to raise interest rates for the third time this year.

It was the Dow's worst week ever in terms of points lost, and the worst of the decade in terms of percentage. On Friday alone, the average lost 266.90 points, or 2.6 percent.

The fall Friday was precipitated by comments late Thursday from Federal Reserve Chairman Alan Greenspan, who expressed concern about the stability of US stock prices.

Shares were also hit by the announcement Friday that US wholesale prices had risen 1.1 percent in September - far above the market estimate of 0.5 percent. That raised fears of inflation in the United States.

In Tokyo, traders sold off Japanese shares following Wall Street's dive, pushing down the benchmark 225 issue Nikkei Stock Average to close 326.24 points lower Monday, at 17,275.33, down 1.9 percent.But traders said government intervention to buy Japanese shares with taxpayer money was probably underway, which would keep the Tokyo market from dropping significantly more.

'There is something there supporting the Nikkei, and it can't be anything but public fund intervention,' said Kunihiro Hatae, general manager of the stock division at Tokyo Securities.But Tokyo's fall, coupled with Wall Street's plunge last week, dragged down markets across Asia on Monday.

In Seoul, the Korea Composite Stock Price Index tumbled 36.38 points, or 4.2 percent, to close at 826.25.

'The market failed to narrow its losses in the afternoon because other overseas stock markets, such as Japan, were weak throughout the day,' said Cho Duck-hyun, a senior strategist at Hanwha Securities Co.

In Sydney, the Australian Stock Exchange's All Ordinaries Index shed 65.5 points to close at 2,796.8, down 2.3 percent from Friday's close.

'There was no way that our market could ignore a fall like that, even though it may have been a healthy correction to their market anyway,' said Jack Moss, a broker at Australia's Shaw Stockbroking Ltd.

The Singapore market too was hobbled by Wall Street's losses, as the benchmark Straits Times Index tumbled 70.16 points, or 3.4 percent, to 1,991.09 late Monday afternoon.

Markets in Hong Kong, a major financial center, were closed for a holiday. Traders said the Hang Seng was likely to follow the downward trend when it reopened Tuesday.

Despite the sell-off in Asian shares, traders said the market was likely to be supported by investors interested in scooping up bargains.

Tokyo shares in particular are seen as a sound investment at this stage, said Sachio Ishikawa, general manager of the stock division at Chuo Securities.

'The U.S. and Japanese economies are at different stages, and their stock market environments are different,' Ishikawa said. 'With US shares falling, this could be an opportunity to buy Japanese stocks.'