Asian Markets Continue to Plunge on US Worries (AP) (22-01-2008)

TOKYO (AP) -- Picking up where European markets left off last night, Asian markets continued to slide declining dramatically at open. The fall is expected to spread to Wall Street, where stock index futures were already sharply down since yesterday.

The Nikkei 225, the benchmark for Asia's biggest bourse, ended the day 5.65 percent after losing 3.9 percent Monday.

Trading was halted in India when the Sensex index plunged 9.75 percent within minutes of opening. Hong Kong's Hang Seng index ended the day 8.65% down on top of the 5.5% loss the day before.

A senior economist at Mizuho Research Institute in Tokyo said that unless we get some positive ‘shock effects,’ such as drastic measures from the U.S. government, there is almost no hope for a recovery in stocks.

Oil and gold prices also fell. Light, sweet crude for February delivery fell to $88.35 a barrel amid speculation that slower U.S. growth will weaken demand. Spot gold, which usually benefits from market uncertainty, fell to a 2-week low of $860.90 per troy ounce.

Financial issues came under selling pressure across the Asia Pacific region. In Tokyo, shares of Mitsubishi UGJ lost 5.88%, those of Mizuho Financial Group plunged by 8.2%, and Chuo Mitsui sank by 10.13%. In Sydney, Macquarie Group plummeted bby 11.4% in and Kookmin Bank shares dropping 3.1% in Seoul.

Markets have been plunging amid pessimism about the ability of the U.S. government to prevent a recession. The Federal Reserve has indicated it will lower interest rates further, and President Bush has proposed an economic stimulus package that includes $145 billion in tax cuts, but investors around the world are doubtful that the measures will lift the economy quickly.

The American economy has been battered by a slump in the housing market and a credit crisis that has led to billions of dollars of losses among major U.S. banks.

There are already signs this is extending to less spending by American consumers, and that means less demand for Asian and European exports.

Source: Yahoo