Asian stock markets fell Monday as investors grew increasingly convinced that Greece would default on its debts, an event that economists say has the potential to spark a global downturn.
Oil prices hovered below $80 per barrel while the dollar strengthened against the euro but was lower against the yen.
Japan’s Nikkei 225 index hit a six-month low, falling 1.7 percent to 8,416.67 as a stubbornly strong yen weighed on the country’s export sector, making its products more expensive overseas. It was the lowest midday price for the Nikkei since March 15, when it hit 8,227.63 in the aftermath of the earthquake-tsunami disaster.
Consumer electronics giants Panasonic Corp. fell 3.4 percent and Sharp Corp. lost 4.4 percent. Isuzu Motors Ltd. tumbled 5.3 percent.
South Korea’s Kospi fell 1.7 percent to 1,667.76 and Hong Kong’s Hang Seng fell 1.8 percent to 17,352. Australia’s S&P/ASX 200 fell 0.5 percent to 3,882.20.
Investors have been waiting in vain for news that Greece will receive the next installment of a bailout package in time to avoid defaulting on its debt next month.
If it defaults, banks throughout Europe are likely to lose the money they invested in Greek bonds – an event that could ultimately lead to a recession in Europe and worsen economic problems in the U.S.
Fears about Europe’s debt increased Friday on news that Moody’s Investors Service had downgraded its ratings of eight Greek banks by two notches.
Intensifying the anxiety: finance ministers from the 20 biggest emerging and developed nations pledged Friday to do whatever is necessary to preserve stability in banking systems and financial markets – but offered nothing specific. The International Monetary Fund on Saturday also pledged to deal decisively with the crisis – but without announcing a new plan of action.
“People expected over the weekend that European finance ministers and IMF officials would probably announce some concrete plans to stabilize the eurozone. But it came out empty again,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong.
“Everything is so negative right now. People are waiting for a positive catalyst to get back into the market,” Wong said. “The road ahead is very unclear.”
Gold shares slumped as investors sold off holdings in the precious metal to raise cash. Hong Kong-listed shares of Zijin Mining, China’s largest gold miner, fell 6.8 percent. Australian gold miner Newcrest Mining Ltd. plunged 8.3 percent.
“Gold’s sharp decline and extreme volatility in recent weeks has raised questions about it retaining its traditional role as a safe-haven asset and the sustainability of its multiyear rally,” Credit Agricole CIB wrote in a report.
On Wall Street on Friday, the Dow Jones industrial average rose slightly — but closed the week down 6.4 percent, its worst showing since the depths of the financial crisis three years ago.
In currencies, the euro fell to $1.3397 from $1.3467 late Friday in New York. The dollar fell to 76.31 yen from 76.72 Japanese yen.
Benchmark oil for November delivery was down 24 cents to $79.61 per barrel on the New York Mercantile Exchange. The contract fell 66 cents to finish at $79.85 per barrel on the Nymex on Friday.