Asian markets slumped yesterday Monday October 3 over renewed fears of a Greek sovereign default and its impact on the global economy, as investors fretted over the failure of Athens to meet its budget deficit target.
The euro slid to a more than eight-month low versus the dollar with no end in sight to the European debt crisis as eurozone finance ministers prepared to meet in Luxembourg to discuss Greece’s progress.
The acknowledgement by Greece that it would miss its deficit targets raised further uncertainty over whether its fresh budget cuts would be enough for it to secure the next tranche of its multi-billion-euro bailout, dealers said.
Tokyo stocks closed down 1.78 percent as exporters tumbled on a weaker euro despite an improvement in the Bank of Japan’s closely watched Tankan survey of business confidence.
The benchmark Nikkei 225 index closed 154.81 points down to 8,545.48, after falling 2.8 percent at one point in afternoon trade.
Worries over the eurozone overshadowed the Tankan survey, which showed Japanese business sentiment turned positive in the third quarter as companies recovered from the impact of the March 11 earthquake and tsunami.
“It’s quite difficult to find a catalyst for a rebound concerning the Greek problem and US economic conditions,” Yutaka Miura, a senior technical analyst at Mizuho Securities, told Dow Jones Newswires.
Sydney was off 2.78 percent at the close, with the benchmark S&P/ASX 200 111.6 points lower at 3,897.0 points.
“We’re getting smashed by global fears,” said Chris Weston, market analyst at IG Markets. “It’s all about what’s happening in Europe. “I think the market is starting to price in global recession now,” he added.
HONG KONG: Shares fell 4.38 percent yesterday to their lowest close in more than two years on new fears about the eurozone debt crisis.
The benchmark Hang Seng Index lost 770.26 points to end at 16,822.15, the lowest close since May 15, 2009.
“I’m not sure whether holding more positions is something to show your clients. Cash is pretty much king and has been for a few months now,” said Benjamin Chang, chief executive officer of LBN Advisors
SINGAPORE: Southeast Asian markets fell as commodity-related shares were hit by fears about the global economy.
In Singapore, the Straits Times Index lost 53.76 points, or 2.01 percent, to 2,621.40.
“In the short term, there is still some headwind,” said Joerg Zeuner, chief strategist at VP Bank Group, a Liechtenstein-based private banking firm. “We consider the slowdown temporary …,” he said.
KUALA LUMPUR: The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) resumed its technical pullback yesterday in step following the sharp decline on Wall Street on Friday. It fell to its intra-day low of 1,353.45 yesterday. Advancing counters outpaced declining counters by 513 to 229.
The FBM KLCI rebounded from its intra-day low of 1,367.95 to its intra-day high of 1,388.55 yesterday. It closed at 1,367.52 points, recording a day-on-day loss of 19.61 points, or 1.41 percent.
In other markets
* Taipei dived 211.41 points, or 2.93 percent, at 7,013.97.
* Bangkok plunged 46.90 points, or 5.12 percent, to 869.31.
* Jakarta retreated 200.32 points, or 5.64 percent, to 3,348.70.
* Manila closed 133.82 points, or 3.34 percent, lower at 3,865.83.
* Mumbai shares fell 1.84 percent, or 302.31 points, to 16,151.45.
South Korea and China were closed.
VIETNAM: The VN Index lost points for the forth consecutive session to 422.12 points, losing 5.48 points or 1.28 percent with two third of listed shares declined.
On the northern floor, HNX Index continued losing points for the third consecutive session to 70 points, down 1% day-on-day with total trading value of over 360 billion dong.
EUROPE: European stocks slumped and the euro hit an eight-month dollar low yesterday after Greece said it would not meet a target for reducing its massive deficit, heaping fresh pressure on the eurozone crisis.
In afternoon stock market trade, Frankfurt’s DAX 30 was down 2.33 percent to 5,373.57 points, the Paris CAC 40 dropped 2.03 percent to 2,921.26 points and in London the FTSE 100 slid 1.55 percent to 5,048.80.
Madrid lost 2.02 percent and Milan 1.37 percent in late morning deals.
The FTSEurofirst 300 index of top European shares was down 1.7 percent at 907.71 points by 1100 GMT.
“The market has simply run out of patience and confidence that politicians and central bankers will be able to put an end to the European financial crisis any time soon,” said Markus Huber, head of German sales trading at ETX Capital.
AMERICA: The latest setback in Greece’s financial crisis sent major stock market indexes to lows for the year Monday and put the Standard and Poor’s 500 index on the verge of a bear market. The euro fell to a 9-month low against the dollar, and the yield on the 10-year Treasury note sank as investors piled money into lower-risk investments.
The slump came on the first day of trading for the fourth quarter and followed the weakest quarter the market has had since the financial crisis. Stocks opened lower, turned briefly higher in late morning trading, then slid throughout the afternoon. The Dow Jones industrial average lost 258 points.
European markets slumped after Greece said it won’t be able to reduce its budget deficits as much as it had agreed to as part of a deal to receive more emergency loans. Markets have responded nervously to headlines out of Europe for weeks, fearful that if Greece defaulted on its debt there might be another lockup in the global financial system, similar to the one triggered by the collapse of Lehman Brothers in September 2008.
“The market is continuing to trade based on what is happening in Europe, and that is going to overshadow everything else,” said Quincy Krosby, market strategist at Prudential Financial. “The math (for the Greek bailout) didn’t add up a year ago, and the math doesn’t add up today,” Krosby said. “The market knows that and is waiting for the Europeans to acknowledge it.”
The S&P 500 lost 32.19, or 2.9 percent, to 1,099.23. The Dow Jones industrial average fell 258.08 points, or 2.4 percent, to 10,655.30.
Indexes of smaller companies fell even more than the Dow and S&P, which are dominated by large companies. The Nasdaq composite slid 79.57, or 3.3 percent, to 2,335.83. The Russell 2000 index of small companies plunged 5.4 percent to 609.49.
All four indexes hit their lowest level for the year.
Banks, energy, and consumer discretionary stocks fell the most. The yield on the 10-year Treasury note fell to 1.78 percent from 1.91 percent late Friday as investors piled into lower-risk investments. The yield hit a record low of 1.71 percent on Sept. 22.
The S&P index has fallen 19.4 percent since its high for the year on April 29. A 20 percent drop would signify the start of a bear market, ending a bull market that began in March 2009.
The Russell 2000 has been in a bear market since Sept. 20, and is down 30 percent from its April 29 high. The Nasdaq is down 19 percent; the Dow 17 percent.
The renewed concerns about Europe’s debt problems pushed the euro down to $1.32 versus the dollar, a 9-month low. The stronger dollar could hurt large U.S. companies that rely on exports by making their products more expensive overseas. Coca-Cola Co. fell 3.2 percent to $65.42. Caterpillar Inc., which sells construction equipment globally, lost 4.5 percent to $70.55. Boeing, another large exporter, dropped 3.7 percent to $58.25.
“Everything that is coming out of Greece suggests that the dollar is only going to strengthen, which doesn’t bode well for the international firms,” said J.J. Kinahan, chief options strategist at T.D. Ameritrade. “It’s tough to be bullish on anything at the moment.”
The Dow briefly turned higher after 10 a.m., when the Institute of Supply Management said its gauge of U.S. manufacturing did better in September than Wall Street had predicted. The Dow and S&P turned mixed within 20 minutes, then took a sharp slide shortly after noon.
Concerns that the U.S. economy is headed for another recession helped send the S&P 500 index down 14 percent in the third quarter, which ended Friday. It was the worst quarter for the stock market since the fourth quarter of 2008, at the height of the financial crisis.
In corporate news, AMR Corp., the parent company of American Airlines, plummeted 33 percent to $1.98 as concerns flared up again that the company could be headed for bankruptcy protection. The stock hadn’t closed below $2 since 2003. American is considered the U.S. airline most vulnerable to an economic downturn.
Bank of America Corp. plunged 9.6 percent to $5.53, the lowest price for the stock since the financial crisis in 2008. The company has fallen 59 percent since January as investors fret that the nation’s largest bank will be hit with more settlements of lawsuits over mortgage securities that lost value after the housing bust.
Yahoo Inc. gained 2.7 percent, to $13.53, after the head of Chinese Internet company Alibaba Group Holdings said he would be interested in buying the company. Yahoo, which recently ousted Carol Bartz as its CEO, has been trying to decide whether to sell parts of the company.
Nine stocks fell for every one that rose on the New York Stock Exchange. Volume was heavy at 5.8 billion shares.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7881 10.2701 0.1016 12.0138 8.4569 7.3846 7.3954 - AUD 1.0531 1.3887 0.0137 1.6245 1.1435 0.9985 - 0.1352 CAD 1.0547 1.3907 0.0138 1.6269 1.1452 - 1.0015 0.1354 CHF 0.9209 1.2144 0.0120 1.4206 - 0.8732 0.8745 0.1182 GBP 0.6483 0.8549 0.0085 - 0.7039 0.6147 0.6156 0.0832 JPY 76.6760 101.111 - 118.279 83.2602 72.7028 72.8092 9.8452 EUR 0.7583 - 0.0099 1.1698 0.8235 0.7190 0.7201 0.0974 USD - 1.3187 0.0130 1.5426 1.0859 0.9482 0.9496 0.1284 Bloomberg