World stock markets skid on earnings jitters
Global equity markets sank on Tuesday, with Asia and Europe
spiralling lower after fresh losses overnight on Wall Street, as worries
mounted about weak corporate earnings, analysts said.
Tokyo plunged by almost five per cent as reports of a big loss at
technology giant Sony stoked fears about the impact of the worldwide
economic crisis on company results.
In European late morning deals, Frankfurt fell 2.37 percent, London
retreated 1.74 per cent and Paris tumbled 2.16 per cent.
"The losses reported by Alcoa last night that kicked off the latest
round of US earnings ... help undermine confidence in general," said CMC
Markets dealer Matt Buckland in London.
US aluminium giant Alcoa reported a bigger-than-expected quarterly
loss after New York markets closed on Monday, adding to investor
jitters. Wall Street reopens at 1430 GMT.
Alcoa, which last week announced massive job cuts and other
cost-cutting moves, said its net loss for the past quarter was 1.19
billion dollars including hefty reorganisation charges.
"A disappointing start to the reporting season - as seen in Alcoa's
large loss - is pressuring stock markets in Asia," said Dariusz
Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.
Tokyo, which was closed on Monday for a holiday, was hardest hit on
Tuesday, slumping 4.79 per cent by the close.
Media reports that Sony is set to post its first annual operating
loss in 14 years due to weak demand added to the gloomy mood.
Hong Kong share prices dived 2.2 per cent, while Shanghai lost 1.95
percent after Shenzhen Development Bank posted a significant loss for
the past year, dealers said.
Analysts said the stock market falls reflected worries among
investors about the health of the American economy after last Friday's
poor jobs report, which eroded optimism about US president-elect Barack
Obama's stimulus plans.
"Investors' eyes are refocusing on the real economy," said Masatoshi
Sato, a strategist at Mizuho Investors Securities.
"News reports that Sony is likely to post an operating loss might be
contributing to the deteriorating market sentiment," he added.
Sony, a bellwether of corporate Japan, is reportedly set to sink into
the red in the financial year to March.
The Japanese icon is likely to post an operating loss of 100 billion
yen (1.1 billion dollars) due to sagging demand and a stronger yen, the
Nikkei business daily reported. Sony shares plunged 8.9 percent.
The strength of the yen has become a major headache for Japanese
exporters, who are also suffering from weak sales as consumers in the
United States and Europe in particular tighten their belts to cope with
recession.
LONDON, Tuesday, AFP
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