Asian markets slump amid fears over Italy
‘Just as everyone was beginning to see light at the
end of the tunnel’:
HONG KONG: Asian stock markets slumped yesterday after Wall Street
suffered a pummelling, with a surge in Italy’s borrowing costs fuelling
global anxiety about the future of the euro.
The common European currency dipped, Hong Kong stocks slumped more
than four percent and in Tokyo, the Nikkei ended down more than two
percent.
“Just as everyone was beginning to see light at the end of the
tunnel, the European crisis seems to have got worse overnight,” IG
Markets analyst Stan Shamu said in Sydney, where stocks dived more than
three percent.
Investors in Asia took succour on Wednesday from Italian Prime
Minister Silvio Berlusconi’s vow to resign once credible economic
reforms are in place by the end of the month.
But in Europe and the United States, markets took flight at the
prospect of a long bout of political uncertainty in Italy to compound
the deepening debt crisis in Greece, where leaders are bickering about a
new government.
On Wall Street, the Dow Jones Industrial Average fell 3.20 percent.
The broad-based S&P 500 lost 3.67 percent while the tech-heavy Nasdaq
Composite tumbled 3.88 percent. The euro bought $1.3543 and 105.25 yen,
down from $1.3544 and 105.38 yen in New York but recovering from earlier
lows in Asia.
The dollar stood at 77.68 yen, from 77.78 in New York Wednesday.
While Greece is struggling to meet strictures imposed by the European
Union and International Monetary Fund for another bailout, Italy is seen
as too big to rescue given its size as the eurozone’s third-largest
economy.
Rome’s bond yields have now surged to a critical level above seven
percent and the EU’s nascent bailout fund lacks the firepower to help.
Other powers such as China and Japan are lukewarm about coming to
Europe’s rescue.
The surge in Italian borrowing costs came at a sensitive time for the
eurozone as “the details of the European Financial Stability Facility
aren’t nailed down yet”, said Yumi Nishimura, senior market analyst at
Daiwa Securities in Tokyo.
The Nikkei in Tokyo closed down 2.91 percent, or 254.64 points, at
8,500.80 and Sydney ended 2.35 percent, or 102 points, lower at 4,244.1.
The Hang Seng in Hong Kong dived 4.34 percent in the afternoon and
Shanghai dropped 1.33 percent. Seoul, which was due to close an hour
later than usual at 0700 GMT, was 3.47 percent off in late trade.
Selling pressure on the Tokyo bourse also increased after official
data showed Japan’s machinery orders for September fell 8.2 percent from
the previous month, worse than the market’s expectation for a 7.1
percent fall. AFP |