SINGAPORE (Reuters) - Shares in Asia fell 3 percent on Monday as concerns over the health of the global economy returned to haunt stock markets, sending investors to seek safe haven government bonds.
The yen rose against other currencies as investors shunned riskier bets and unwound currency carry trades, while oil drifted back down below $90 a barrel with traders saying Friday's $1.30 surge might have been overdone after Wall Street ended the week on a down note following two days of sharp gains.
Europe's stock markets were tipped to fall, with financial bookmakers predicting Britain's FTSE 100, Germany's Dax and France's CAC-40 to open around 2 percent lower.
Investors resumed selling after last week's nerve-wracking rollercoaster, which saw global equity markets toppled by growing despair over the U.S. economy earlier in the week and then lifted by a $150 billion stimulus plan agreed by U.S. legislators and the White House.
"The sell-off is hitting all sectors regardless of each company's earnings and outlook," said Kim Joong-hyun, an analyst at Goodmorning Shinhan Securities. "Although last week's U.S. rate cut has calmed down panic selling, a recovery from the economic woes and the financial sector's debt problems should take a long time."
Seoul's KOSPI index shed almost 4 percent. Foreign investors continued their selling spree for the 18th straight session, dumping 268 billion won ($283 million) in net value on the main board.
Japan's Nikkei benchmark ended down 4 percent. Goldman Sachs said Japan's economy may be already in recession, due partly to weaker exports and sluggish consumption.
Australia's market was shut for a public holiday. Hong Kong's Hang Seng slid 3 percent, while MSCI's index of Asia-Pacific stocks excluding Japan fell 3.4 percent by 0700 GMT, taking year to date losses back above 12 percent.
Shanghai suffered the worst losses, falling 7 percent, dented by heavy snow across central and eastern China, which is seriously disrupting food and energy supplies.
DAVOS DOWNER
Traders were eyeing this week's Federal Reserve meeting, at which the bank is set to cut U.S. interest rates again, having slashed them in an emergency move last week.
World business leaders gathered in Davos for last week's meeting said on Saturday the worst might yet be to come in a financial crisis driven by continuing fears of bank losses and uncertainty over U.S. emergency stimulus measures.
Banks said there were few cures for a financial system faced with hundreds of billions of dollars in investments which have turned bad.
"It will be a while before you see a return of normalcy in banking and markets," Merrill Lynch CEO John Thain said.
French bank Societe Generale's trading scandal remained in focus.
On Sunday, the bank defended its handling of the world's biggest trading scandal, but admitted its risk systems had failed to detect a 50-billion-euro market bet by a lone trader. For a list of stories, click on
For now, some investors sought safety in government bonds.
Japan's March 10-year futures rose 0.72 of a point to 138.08, while the benchmark 10-year bond yield fell to 1.405 percent.
In the currency markets investors were looking to equity markets, seeking clues on whether to tiptoe back to risky carry trades, in which the low-yielding yen is used as a source of cheap funds to buy higher-yielding currencies.
The dollar fell to 106.12 yen while the high-yielding Australian dollar fell 0.8 percent against the yen
Sterling fell against the yen and the dollar after a senior Bank of England official said interest rates need to be cut to prevent a sharp slowdown in British growth
U.S. crude fell 87 cents to $89.83 a barrel.
Gold and platinum traded near record highs supply fears lingered after South Africa's mines halted production due to a power crisis.
Spot gold rose to $917 an ounce from $918.00/919.00 an ounce late in New York on Friday, when the metal rallied to record high of $923.40 an ounce.
No comments:
Post a Comment