21 Nov 2008

Asia-Pacific shares follow Wall St plunge

6:35 am on 21 November 2008

Stock markets in Asia and the Pacific fell again on Thursday, after heavy losses on Wall Street.

The Dow plunged more than 5% on Wednesday to its lowest level in five-and-a-half years on rising economic worries.

At the close, the Dow Jones average was down 427 points to close at 7,997.28, below the 8,000-level for the first time since 2003.

Japan's Nikkei stock index tumbled 6.89% by the close of trade after heavy losses on overseas markets and another raft of gloomy economic data.

The Nikkei dropped 570.18 points to end at 7,703.04, the lowest close in about three weeks.

The New Zealand market ended the day down 2.3% at 2644 on turnover of $84 million.

Top shares Telecom was down 4 cents to $2.31, Contact slid 35c to $6.80 and Fletcher Building fell 22c to $5.48. Fisher & Paykel Healthcare fell 4c to $3.08, despite posting a 51% increase in half-year profit.

Share prices in Hong Kong and South Korea were down by more than 5%, while in Australia the benchmark S&P/ASX200 index was 4.19% lower.

Expectations for a sharp slowdown in global growth sent oil down for a fifth session in a row, with prices falling 87c to $US52.70. In July, it reached a record high of about $US147 a barrel.

The falls in Asian markets come after the US Federal Reserve said American gross domestic product could be flat this year and might shrink in 2009.

The Fed is expected to cut its key interest rate to 0.5% in December - it cut rates twice in October to 1%.

Several east Asian countries including Japan, Singapore and Hong Kong are already in recession and the thought that America may be about to join them has been enough to send shares tumbling throughout the region.

Bad news from the US worries Japanese firms such as Toyota and Nintendo, which depend on American consumers for much of their profit, the BBC reports.

Investors know just how vulnerable such Asian companies are to a downturn in the US, which is one reason why Japan's stock market has dropped more than 50% so far this year.

US consumer prices fell 1% in October - their biggest drop on record.

Japan's exports to Asia fall

Japan's exports to Asia fell in October for the first time since 2002 on Thursday, showing that the fallout from the credit crisis has spread to neighbours such as China and adding momentum to investors' flight to the safety of cash.

Capital flight from emerging markets drove the currencies of South Korea and Indonesia to their lowest levels since the Asian financial crisis a decade ago. India's rupee hit a record low.

Shipments to Asia had previously cushioned the impact on Japanese exports of weakening demand from the US and Europe. But data on Thursday showed they fell 4% in October from a year earlier.

The drop in Japanese exports contributed to mounting signs elsewhere that the global slowdown could get worse.