Market Panic In Asia As Stocks Slump

[george]

LONDON: -- Panic accompanied the opening of European markets on Tuesday after Asian markets suffered a second day of heavy losses brought on by concerns over weaknesses in the U.S. economy.

Tokyo investors are worried about how a possible U.S. recession could hurt exporters' profits.

European shares, which also slumped on Monday, followed Asian declines with London's FTSE 100 down 1.06 percent, Paris' CAC 40 down 1.56 percent and Frankfurt's DAX 30 down 3.14 percent.

Traders are now waiting nervously to see how Wall Street reacts when it reopens Tuesday after the Martin Luther King public holiday.

"The panic continues," said CNN's Financial Editor Todd Benjamin. "Markets are down sharply in Europe, following another rout in Asia. No market has escaped the bloodbath, and the fear is palpable." Read Todd's blog on market panic

Japan's Nikkei 225 index slid 5.65 percent Tuesday to close at 12,573.05 on the Tokyo Stock Exchange. Australia's benchmark S&P/ASX200 index closed down 7.1 percent at 5,186.8 -- the biggest one-day loss for almost 20 years.Video Watch CNN experts debate the prospects for a recession »

China's benchmark Shanghai Composite Index closed down 7.2 percent at 4,559.75. India's Sensex index plunged 10 percent after resuming trade when an automatic shutdown was triggered by an 9.75 percent slump at the opening. Shares on the Sensex had fallen nearly 11 percent -- a four-month low -- on Monday.

In South Korea -- where the market also closed temporarily -- shares fell sharply before the Korea Composite Stock Price Index recovered slightly to finish the session down 4.4 percent at 1609.02, having slid as much as 6.3 percent during the day.

Indonesia's market, meanwhile, was down 10 percent and Hong Kong's Hang Seng index dropped 2,061.23 points, or 8.7 percent, to 21,757.63.

The Singapore stock exchange was down 4.5 percent, and Taiwan's benchmark Taiex was down 6.6 per cent during trading. "People here are just panicked," reported Eunice Yoon, the Asia business editor for CNN.

Traders said steps announced last week by President Bush to kick-start the U.S. economy are too little too late. They got no direction from New York, because U.S. markets were closed.

Analyst Howard Wheeldon of BGC Partners said in comments made Monday that it was expected that the U.S. would open down. "That is a big kick in the teeth for President George W. Bush," he added.

Markets also plunged across South America Monday, where the United States is the largest trading partner for many economies. Brazil's Bovespa exchange, the continent's largest, closed down 6.6 percent, Argentina's Merval dropped 6.3 percent, Colombia's IGBC was down 7.7 percent and Peru's General Index was off 8.4 percent.

In North America, the Toronto stock exchange fell 4.75 percent, while Mexico City closed down 5.35 percent.

"I think a lot of people had been hoping that when the new year started that we would find that the U.S. housing market's problems were largely isolated to that market," said Royal Bank of Scotland's Kit Jukes Monday. "Every piece of news we've had since Christmas has argued against that position."

If the United States slips into recession, Americans may buy fewer goods, especially those from overseas. That's why shares from Toyota in Tokyo to BMW in Frankfurt were down heavily.

Banks also fell hard as the lending policy during the boom time continues to concern analysts. Banks and insurance companies also own a lot of equities.

Commodity-led shares, like oil firms and mining companies, were also hit hard, after flying high for most of 2007. If the world economy falters consumers are likely to less oil and buy fewer products like gold and copper.

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By only the 14th trading day of 2008, shares in Europe's main markets are now down between 12 to 15 percent on the year.

During the market gyrations of 2007, sharp falls were often followed by sharp rises. There is no evidence of that yet in 2008.

--CNN 2008-02-22

[moldy]

This is possibly the most volatile market ever seen. The amazing thing is it's been driven more by fear than anything else. Some banking stocks in The UK are being slaughtered and they don't even appear to have a problem. We're in crash terrirory. Banking sectors traditionally get walloped first and that's whats happened with some shares down 40% or more. If this translates to mining stocks there is going to be one heck of a slip.

A lot depends on how the Dow responds today. It tends to be a more resilient market than others. We'll see. But if it should fall heavily expect yet another bleak day throughout the world, and then a bear market to follow for some time.

Thailand is a particularly vulnerable economy. Exporters are already feeling the pich due to the strong bt. A US led recession will probably worsen that situation. Moreover Thailand has relied heavily on foreign investment for growth. We're seeing huge investors sell up all they have to consolidate their core assets at home. We're told tourism is not a major player in the Thai economy, well we're going to see if that's true or not, as one thing is for sure, there's going to be less and less farangs jetting over for 5 star breaks.

[ironhut]

It's been ugly in the US for the past couple of weeks and could indeed be much uglier today after coming off a 3-day weekend with all Asian markets crashing over the past two days.

As for the Baht strengthing further, I'm not so sure. Many in the US are now finding they may have to pull money from various places (one of those places being overseas investments).

We're paid in Dollars, so I don't really know what to think......and hope things settle soon.

[Thaipwriter]

A lot depends on how the Dow responds today.

Dow futures right now are over 1008 points down at 11,091.

Anybody see a crash coming?

[moldy]

A lot depends on how the Dow responds today.

Dow futures right now are over 1008 points down at 11,091.

Anybody see a crash coming?

Wow! if that pans out then I think I foresee a multi car freakin pile up. It'll be interesting to see how the European markets handle it, when I last looked the FTSE was recovering.

[Lilawadee]

How would Thailand be affected in a global recession?

in terms of:

* Baht strength against other currencies

* Interest rates

* Company investments / jobs

* Tax level

?

[moldy]

How would Thailand be affected in a global recession?

in terms of:

* Baht strength against other currencies

* Interest rates

* Company investments / jobs

* Tax level

?

Not an easy one for even an economist to predict. You have to look at the overall picture. As Thailand is firmly in the global economy, it's safe to bet that it would be effected.

Company/investment and jobs would be seriously influenced for the worse. We've already seen a large outflow of cash back to foreign soils. Thailand relies heavily on exports of foodstuffs and these are more resilient commodities. However it's not very competitive and already suffering from a strong bt, the seeds are already there.

Interest rates are primarlily determined by inflation rates. If inflation is not thought to be problematic then rates tend to fall in a recession so as to stimulate domestic growth and this would weaken the currency.

Taxation is really determined by internal policy, however, any increase might jeopardise consumer spending power and this again is something to be avoided.

I think in summary, a recession effects negatively just about everything.

[gregybn]

The sky is falling!

Chicken Little.

We're freaking doomed!

The Mogambo Guru.

The winners will be those who lose the least

Anon.

Got Gold?

Yours truly.

[moldy]

The sky is falling!

Chicken Little.

We're freaking doomed!

The Mogambo Guru.

The winners will be those who lose the least

Anon.

Got Gold?

Yours truly.

. Yes it must be pointed out that stocks and shares are little bits of paper that white shirted gamblers like to have a punt on, they don't nececessarily represent the true value of a company.

Recessions on the other hand do severely impact all our lives financially, but what a freakin to do over nothing.

[lannarebirth]

Markets the world over have mispriced earnings potentials and risk. It is not a US only problem. It is a problem of too low interest rates globally and poor risk assessment. Some really poor financial reporting. Still, it was a nice day outside today.

[moldy]

Markets the world over have mispriced earnings potentials and risk. It is not a US only problem. It is a problem of too low interest rates globally and poor risk assessment. Some really poor financial reporting. Still, it was a nice day outside today.

Nice day outside, Bangkok?- wait till the pollutants kick in this evening.

Anyway the Dow Jones is ready for the off. Could be a historic (possibly hysteric) day to day. If it does drop like a stone, be careful when walking near tall buildings tomorrow.

[Naam]

Markets the world over have mispriced earnings potentials and risk. It is not a US only problem. It is a problem of too low interest rates globally and poor risk assessment. Some really poor financial reporting. Still, it was a nice day outside today.

Nice day outside, Bangkok?- wait till the pollutants kick in this evening.

Anyway the Dow Jones is ready for the off. Could be a historic (possibly hysteric) day to day. If it does drop like a stone, be careful when walking near tall buildings tomorrow.

my belly says that nothing really dramatic will happen

[moldy]

Markets the world over have mispriced earnings potentials and risk. It is not a US only problem. It is a problem of too low interest rates globally and poor risk assessment. Some really poor financial reporting. Still, it was a nice day outside today.

Nice day outside, Bangkok?- wait till the pollutants kick in this evening.

Anyway the Dow Jones is ready for the off. Could be a historic (possibly hysteric) day to day. If it does drop like a stone, be careful when walking near tall buildings tomorrow.

my belly says that nothing really dramatic will happen

I reckon dramatic drop morning, then slow return to normal, but who knows?

[moldy]

Markets the world over have mispriced earnings potentials and risk. It is not a US only problem. It is a problem of too low interest rates globally and poor risk assessment. Some really poor financial reporting. Still, it was a nice day outside today.

Nice day outside, Bangkok?- wait till the pollutants kick in this evening.

Anyway the Dow Jones is ready for the off. Could be a historic (possibly hysteric) day to day. If it does drop like a stone, be careful when walking near tall buildings tomorrow.

my belly says that nothing really dramatic will happen

I reckon dramatic drop morning, then slow return to normal, but who knows?

TIMBER. Watch that big old oak go. Hey hang on a minute barely a move My house plant trembled a bit

though.

Oh well, kept me amused for a while.

Better get off and do a bit of work I spose.

[LaoPo]

If only Bernanke cut interest rates (planned anyway) with a 100 basispoints before opening of Wall St..

That could save the markets from the negative spiral, for the moment.

LaoPo

[ironhut]

US Feds just dropped a whopping 3/4 of a point in interest rates (at 8 something in the morning Eastern US time). The immediate response is that futures are already up, but we'll see how long that lasts.

Obviously the Feds saw a meltdown coming...

Edited January 22, 2008 by ironhut

[LaoPo]

It seems I was (in)-correct with just 75% of the 100 basis points but I'm afraid it's not enough to easy the worries of Wall St. or stop the spiral downwards...

Let's see what happens today in New York.

LaoPo

[LaoPo]

"Bank of America Corp. declined after the second-largest U.S. bank said earnings dropped 95 percent."

"Wachovia Corp., the fourth-largest U.S. bank, said profit fell 98 percent after writedowns for bad loans and mortgage- backed securities."

From:

U.S. Stock Futures Drop on Concern Rate Cut Won't Stop Slowdown

By Elizabeth Stanton

Jan. 22 (Bloomberg) -- U.S. stock-index futures tumbled, signaling the worst decline for the Standard & Poor's 500 Index since 2001, on concern the economy is shrinking and the biggest Federal Reserve interest rate cut in 23 years won't revive it.

Exxon Mobil Corp., the largest oil company, and Barrick Gold Corp., the biggest gold producer, fell as crude and metal prices decreased. Bank of America Corp. declined after the second-largest U.S. bank said earnings dropped 95 percent.

S&P 500 Index futures expiring in March retreated 58.7, or 4.4 percent, to 1,266.6 at 8:58 a.m. in New York after earlier slumping as much as 5.3 percent. Dow Jones Industrial Average futures decreased 466 to 11,640. Nasdaq 100 futures lost 80.75 to 1,768.75.

``People may see it as an extreme step and feel that it's a sign the situation is worse than they had anticipated,'' said John Carey, who helps oversee about $13 billion at Pioneer Investment Management in Boston. ``This will definitely wake people up who were thinking the economy was just fine.''

The Fed lowered its benchmark rate by 0.75 percentage point to 3.5 percent in its first emergency move since 2001. Policy makers weren't scheduled to gather on rates until Jan. 29-30.

``While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate,'' the Fed said in a statement. The Federal Open Market Committee took the action ``in view of a weakening of the economic outlook and increasing downside risks to growth.''

A 4.4 percent decline in the S&P 500 would be the biggest since a 4.9 percent drop on Sept. 17, 2001, the first trading day after the Sept. 11 terrorist attacks.

The U.S. market was closed for Martin Luther King Day yesterday. Stocks posted the steepest weekly drop since July 2002 last week after lower-than-estimated home construction, retail sales and manufacturing reinforced speculation that the economy is contracting.

Global Slump

The MSCI World Index fell 1 percent. The Dow Jones Stoxx 600 Index of European shares slumped 0.8 percent.

Exxon decreased $4.08 to $81 and Barrick lost 98 cents to $45.75.

Bank of America slid $2.22 to $33.75. Fourth-quarter net income fell to $268 million, or 5 cents a share, from $5.26 billion, or $1.16, a year earlier the bank said in a statement. Excluding merger and restructuring costs and a gain from the sale of Marsico Capital Management LLC, the company earned 5 cents a share, missing the 21-cent average estimate of analysts surveyed by Bloomberg.

Wachovia Corp., the fourth-largest U.S. bank, said profit fell 98 percent after writedowns for bad loans and mortgage- backed securities. Its shares slipped $1.65 to $29.15.

`One Shock'

The U.S. economy may be ``one shock'' away from a recession, with the global slump in stocks a possible ``tipping point,'' according to Lehman Brothers Holdings Inc. The New York-based firm sees the odds of a recession in the world's largest economy at 40 percent, rising from a ``1-in-3 chance'' at the beginning of the year, Paul Sheard, Lehman's global chief economist, said in a press briefing in Singapore today.

Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. are already forecasting the U.S. will slip into recession this year. The world's largest banks and securities firms have announced more than $100 billion in debt writedowns and loan losses after the collapse of the U.S. subprime mortgage market.

The MSCI Asia Pacific Index today lost 6.4 percent. Japan's Nikkei 225 Stock Average dropped 5.7 percent, while India's Sensitive Index fell 5 percent.

Goldman, Merrill

Goldman, the world's largest securities firm, dropped $9.21 to $178. Merrill, the biggest U.S. brokerage, retreated $2.77 to $49.10.

Apple Inc. is scheduled to report first-quarter earnings after the close of U.S. exchanges. The maker of Macintosh computers may report earnings of $1.61 a share, the average of 23 estimates in a Bloomberg survey. The shares lost $10.39 to $150.97.

``Apple and Johnson & Johnson will give a good indication of consumer spending worldwide,'' Joerg de Vries-Hippen, chief investment officer for European stocks at Allianz Global Investors in Frankfurt, said in a Bloomberg Television interview today.

Analysts estimate companies in the S&P 500 will report an average 17 percent decline in profits in the fourth quarter, led by a 95 percent decrease in financial company earnings, according to a Jan. 18 Bloomberg survey.

http://www.bloomberg.com/apps/news?pid=206...&refer=news

LaoPo

[BigSnake]

Hang on folks we haven't seen nothing yet U.S. Fed just cut rate 0.75. My guess it will get worse before things chill and turn for the best.

[Thai at Heart]

Hang on folks we haven't seen nothing yet U.S. Fed just cut rate 0.75. My guess it will get worse before things chill and turn for the best.

Isn't subprime being proven to be the least accurate adjective in the English language?

[LaoPo]

Most of the EU markets recovered from deep red into a plus...

Dow and Nasdaq so far not too bad with -1.25% and 2.25% as I write.

Bank of America is doing not too bad at the moment after a sharp deep red. Now a small +

But, it's not over yet.

LaoPo

[moldy]

Hang on folks we haven't seen nothing yet U.S. Fed just cut rate 0.75. My guess it will get worse before things chill and turn for the best.

Isn't subprime being proven to be the least accurate adjective in the English language?

quite possibly. But don't be fooled by the headlines. This latest downturn is recession becoming reality. The sub - prime is a one off and the banks have taken it full on the chin. No this is now about the indices as a whole adjusting to some pretty gross over valuations. I mean there is good news in the mining shares but it's been priced in about 4 times already. We're not in meltdown terirtory yet but I'd expect to see quite a few more days like this occurring every couple of weeks or so for the next few months. The banks have weathered the worst in fact in the UK they are well up today.

But well over the top or what.

[LaoPo]

New York Close, Tuesday Jan. 22 - 2008

Dow -1.06%

Nasdaq -2.04%

S&P500 -1.11%

So, the damage is limited and the 0,75% interest cut helped, for the time being.

LaoPo

[britmaveric]

Let it drop further - can get better deal on stock purchases. Soon will be time to invest again....

[cclub75]

So, the damage is limited and the 0,75% interest cut helped, for the time being.

Limited indeed.

It's like a drug. Even with higher dose... addiction.... effects are getting less and less strong.

Next step : OD ?

[LaoPo]

Asian stock markets are ready for a strong rebound this morning -Wednesday Jan. 23 -2008-...

Opportunity knocks...

LaoPo

[usatrader]

Jan 22nd

Japan's Nikkei 225 index slid -5.65 percent Tuesday to close at 12,573.05 .

Jan 23rd @ 12:01am

+1.05% 12,704.98

Jan 22nd

Australia's benchmark S&P/ASX200 index closed down -7.1 percent at 5,186.8 –

Jan 23rd

+4.26% 5,444.2 @ 12:11am

Jan 22nd

Hong Kong's Hang Seng index dropped 2,061.23 points, or -8.7 percent, to 21,757.63.

Jan 23rd

+5.29% 22,907.84 @ 11:53pm

Jan 22nd

India's Sensex index plunged -10 percent after resuming trade when an automatic shutdown was triggered by an -9.75 percent slump at the opening. Shares on the Sensex had fallen nearly 11 percent -- a four-month low -- on Monday.

Jan 23rd

+4.23% 17,443.3 @ 10:08AM

Jan 22nd

In South Korea -- where the market also closed temporarily -- shares fell sharply before the Korea Composite Stock Price Index recovered slightly to finish the session down 4.4 percent at 1609.02,

Jan 23rd

+.72 percent at to 1,620.70 @ 12:20am

[Jai Dee]

Thailand needs no emergency measures

Finance Minister Chalongphob Sussangkarn said on Wednesday that there is no need for emergency measures for the slump in the stock exchange in the past two days.

He believed that the Thai and regional exchanges would react positively to the US Federal Reserve Board's decision to slash its benchmark rate by 75 basis points.

The US central bank on Tuesday cut its base short-term interest rate by three quarters of a per centage point to 3.50 per cent amid worries a potential US recession could destabilise the world economy.

"The cut is deeper than expected. This is a positive sign as the rate cut would send a positive impact to the global financial markets and shows the Fed's readiness in tackling the problems at home. But in Thailand, we would need no urgent meeting on emergency measures. The Thai exchange and the baht would move in line with regional movements," he said.

While the exchange is expected to move up in line with regional bourses, Chalongphob foresees the slight depreciation of the Thai baht against US dollar due to foreign sell-offs in the exchange and capital outflows.

Thailand Development Research Institute (TDRI) research director Somchai Jitsuchon however said that the steep rate cut indicates the worse-than-expected slowdown in the US economy. While the problems have hit the Thai exchange, the export sector could be the next to be hurt following lower demand.

He said that the Thai export growth could be less than 10 per cent this year.

Source: The Nation - 23 January 2008

[Jai Dee]

Asian stocks soar again

Stock markets across Asia pulled out of a stomach-churning, two-day massacre on Wednesday as investors welcomed a hefty, surprise interest rate cut overnight by the US Federal Reserve to shore up the sagging American economy.

The Thai market was an exception, falling almost a point in morning trading as other markets in Asia and the Pacific mostly surged ahead. The SET was off 0.87 points.

More from the Bangkok Post here.

[usatrader]

Jan 22nd

Japan's Nikkei 225 index slid -5.65 percent Tuesday to close at 12,573.05 .

Jan 23rd @ 12:01am

+1.05% 12,704.98 +2.04% 12,829.06

Jan 22nd

Australia's benchmark S&P/ASX200 index closed down -7.1 percent at 5,186.8 –

Jan 23rd

+4.26% 5,444.2 @ 12:11am +4.28 5,545.6

Jan 22nd

Hong Kong's Hang Seng index dropped 2,061.23 points, or -8.7 percent, to 21,757.63.

Jan 23rd

+5.29% 22,907.84 @ 11:53pm +10.72 24,090.17

Jan 22nd

India's Sensex index plunged -10 percent after resuming trade when an automatic shutdown was triggered by an -9.75 percent slump at the opening. Shares on the Sensex had fallen nearly 11 percent -- a four-month low -- on Monday.

Jan 23rd

+4.23% 17,443.3 @ 10:08AM +5.17% 17,594.07

Jan 22nd

In South Korea -- where the market also closed temporarily -- shares fell sharply before the Korea Composite Stock Price Index recovered slightly to finish the session ]down 4.4 percent at 1609.02,

Jan 23rd

+.72 percent at to 1,620.70 @ 12:20am +1.21% 1,628.42