Global markets plunge on recession fears

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http://www.channelnewsasia.com/stori...145143/1/.html

Global markets plunge on recession fears
Posted: 05 August 2011 0548 hrs

NEW YORK: Stock markets worldwide plunged on Thursday amid fears of a new global economic downturn, with Wall Street suffering its worst day since the financial crisis.

Mounting worries over the eurozone debt crisis and a new batch of weak economic data from the United States did a one-two punch to hammer investor confidence, shaking investors on both sides of the Atlantic.

The Dow Jones Industrial Average fell 4.3 per cent, or 512.76 points -- its worst one-day drop since December 2008 -- to close at 11,383.68, erasing all of its gains so far this year.

The broader S&P 500 dropped 4.8 per cent to end the day at 1,200.07, while the tech-heavy Nasdaq Composite dived 5.1 per cent to 2,556.39.

London's benchmark FTSE 100 index fell 3.43 per cent, retreating to levels last seen in September 2010; in Frankfurt the DAX fell 3.40 per cent, and France's CAC 40 dropped 3.90 per cent.

In Brazil, the Sao Paulo Stock Exchange lost 5.72 per cent, while Mexico's Bolsa lost 3.4 per cent.

"We're seeing the erosion and now the loss of confidence, confidence in the economy, confidence in the market, confidence in the policy makers. It's all showing up," said Hugh Johnson, of Hugh Johnson Advisors.

"There is a deep concern about global growth and of the state of play in the United States in particular," said City Index analyst Giles Watts.

"Traders are growing increasingly concerned about a sharp slowdown in US economic activity in the third quarter."

In Europe, investor sentiment remains plagued by worries that debt-laden Italy and Spain could be engulfed by the fast-moving eurozone debt crisis.

The European Central Bank announced Thursday that it would resume emergency credit-easing measures, some of which were last enacted at the height of the global financial crisis.

But the ECB's efforts still failed to restore confidence. The risk premium investors demand to buy Spanish 10-year bonds over safe-bet German debt shot back up to near a record high on Thursday.

The eurozone debt crisis has put Italy and Spain under huge pressure in recent weeks after Greece, Ireland and Portugal had to be bailed out by the European Union and the International Monetary Fund.

In the United States, data continued to point to a very weak economy, with some analysts citing fears of a new recession.

The US Labor Department reported Thursday that weekly claims for unemployment benefits remained at a high 400,000 last week.

"Stocks have retreated deeper into the red to set a new 2011 low. The bleeding continues to be broad-based," said Briefing.com.

"European banking stocks are under pressure as contagion fears work their way into Italy, the third largest economy in the eurozone."

Gold scored a new record at $1,681.72 per ounce on the spot market in New York as investors flocked to the precious metal, regarded as a safe bet in times of economic turmoil. It later retreated to $1,647.57.

Prices for US government bonds, another safe haven, also rose. The yield on the 10-year Treasury dropped to 2.46 per cent from 2.60 per cent late Wednesday, while that on the 30-year bond fell to 3.72 per cent from 3.87 per cent. (Bond prices and yields move in opposite directions.)

Oil prices in New York and London both fell more than five per cent amid fears that a slowdown could take a deep bite out of global energy demand.

"The fear of a double dip recession with the slowdown in the US and the sovereign debt situation in Europe is having everybody biting their nails," said Adam Sieminski, chief energy economist of Deutsche Bank.

On forex markets, the dollar surged against other major currencies, helped by Japanese and Swiss government interventions to press their own currencies back down after the recent jump in risk-aversion.

But by the end of the day, the Swiss franc -- the favorite safe-haven of recent months -- ended higher against the greenback: at 2100 GMT, one dollar bought 0.7666 francs, compared to 0.7692 late Wednesday.

The euro fell more than two per cent to 1.0818 francs from 1.1019.

But the dollar was up against the euro, which brought $1.4106 (from $1.4318) and the yen, 78.93 yen (from 76.97).

The pound also lost ground to the greenback, to $1.6266 (from $1.6422).

-AFP/ac

[Leeds]

Usually the stock market is 6-month ahead of property market. Is this the beginning of property market meltdown? I think the "perfect storm" is probably already here.

[ysyap]

Asian stocks tumble after Wall Street slide

Asian stock markets tumble after Wall Street slide; Japan down 3.4 pct, Hong Kong down 4.4 pct

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Pedestrians are reflected on the glass of stock indicators in downtown Tokyo on Friday Aug. 5, 2011. Asian stock markets are tumbling amid fears the U.S. may be heading back into recession and Europe's debt crisis is worsening. (AP Photo/Kyodo News) JAPAN OUT, MANDATORY CREDIT, NO LICENSING IN CHINA, FRANCE, HONG KONG, JAPAN AND SOUTH KOREA




Joe Mcdonald, AP Business Writer, On Friday 5 August 2011, 11:51 SGT
BEIJING (AP) -- Asian stock markets tumbled Friday amid fears the U.S. may be heading back into recession and Europe's debt crisis is worsening.
The sell-off in Asia follows the biggest one-day points decline on Wall Street since the 2008 financial crisis.

Oil prices extended sharp losses to near $86 a barrel in Asia amid expectations a slowing global economy will undermine demand for crude.

Japan's Nikkei 225 stock average slid 3.4 percent to 9,328.74 points and Hong Kong's Hang Seng dived 4.4 percent to 20,912.60. China's Shanghai Composite Index lost 2.1 percent to 2,626.80.

Investors fretted over the U.S. economic recovery ahead of Friday's release of crucial jobs figures for July, which often set the tone in markets for a week or two.

Many were also rattled by the lack of agreement in Europe about debt and how to stabilize the euro, said Tom Kaan of Louis Capital Markets in Hong Kong.

He said they also were watching to see whether the U.S. Federal Reserve launches a new stimulus effort.

"A lot of people will be trying to stay on the sidelines," Kaan said. "It's a general fear that is clouding the markets at the moment."

Elsewhere in Asia, South Korea's Kospi index shed 3.6 percent to 1,945 and Taiwan's benchmark skidded 4.4 percent to 7,952.98. Australia's benchmark dropped 4 percent to 4,103.10.

Investors, already fidgety after protracted bargaining to raise the U.S. debt limit and worries that Italy and Spain are getting deeply embroiled in
Europe's debt crisis, searched for assets considered safer, such as gold.
"Stocks will continue to dive, especially in Euroland, where profits are disappointing analysts' estimates," said Carl B. Weinberg of High Frequency Economics in a report.

In Europe, most markets shed more than 3 percent Thursday. France's CAC-40 tumbled 3.9 percent, Germany's DAX lost 3.4 percent and Britain's FTSE 100 also shed 3.4 percent.

For the day, the Dow closed down 512.76 points, at 11,383.68. It was the steepest point decline since Dec. 1, 2008.

Thursday's decline was the ninth-worst by points for the Dow. In percentage terms, the decline of 4.3 percent does not rank among the worst. On Black Monday in 1987, for example, the Dow fell 22 percent.

In currency markets, the dollar edged down to 78.64 yen from late Thursday's 79.02 and the euro weakened slightly to $1.4100 from Thursday's $1.413.

On Thursday, Japan's government intervened in markets to weaken the yen against the dollar to support exporters. Finance Minister Yoshihiko Noda said authorities acted to protect the economic recovery following the March 11 earthquake and tsunami.

The dollar had fallen as low as 76.29 yen on Monday. It hit a record post-World War II low of 76.25 yen in the days following the March 11 earthquake and tsunami.

The intervention was coupled with monetary policy easing by the central bank's board.

Japan's moves came only a day after the Swiss National Bank intervened to slow a rise in the Swiss franc, another currency perceived as a save-haven at a time investors are fleeing risky assets such as shaky European government bonds.

Benchmark oil for September delivery was down 39 cents to $86.20 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $5.30 to settle at $86.63 on Thursday.

Associated Press writer Alex Kennedy in Singapore contributed.

[land118]

http://www.cnbc.com/id/44031109

Futures Jump After Positive Jobs Report


Futures rallied Friday after a government jobs report that trumped expectations, following a sharp global selloff across in the previous session as investors were rattled over fears the European debt crisis was spreading to Spain and Italy.*


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Hiring picked up in July as the Labor Department reported employers added 117,000 jobs last month and the unemployment rate dipped to 9.1 percent, an improvement from the past two months. Economists had expected a gain of 85,000 jobs.

"Wow! An incredible surprise considering the horrific macro points we've received the past few months," said Todd Schoenberger, managing director of LandColt Trading. "Personal spending, manufacturing, GDP—all of this kept traders awake at night."

"Risk will reenter the markets, especially after yesterday's poisoned session," added Schoenberger. "Look for yields to rise, as well, with investors shifting allocations before the weekend."