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SINGAPORE, Oct. 22 — http://www.nytimes.com/2007/10/22/bu...hp&oref=slogin
Renewed concerns about the health of the American economy sent Asian stocks sharply lower today, and European stocks also registered declines in early trading.
Following a dramatic decline by stock prices in the United States on Friday — the 20th anniversary of the 1987 “Black Monday” stock market crash — investors in Asia sold off stocks on worries that the United States mortgage crisis would crimp demand among American consumers for Asia’s exports.
Hong Kong’s benchmark index of share prices fell by more than 2.5 percent, while in Japan the benchmark Nikkei 225 Stock Average dropped by almost 2.4 percent. Asia’s smaller markets were also hard hit: stocks in the Philippines slid by almost 4 percent.
In Europe during early trading, London’s FTSE 100 was down 84 points, or 1.3 percent, but was trading off its lows. The German DAX stock market index was down 1.2 percent, and the Paris market had fallen by around 1.6 percent.
In Asiam the declines rekindled what analysts have been referring to as a “flight from risk,” a phenomenon that hit Asian and emerging markets after the subprime mortgage crisis erupted in late July.
“There’s going to be credit rationing and risk aversion,” said Alastair Newton, managing director and senior political analyst at Lehman Brothers. Investors, he said, “were hypnotized by returns and oblivious to risk.”
Along with a retreat from relatively risky Asian stocks, Asian currencies fell against the dollar, while the dollar dropped against major currencies such as the Japanese yen and the euro. Gold, which has been spiraling higher in recent weeks on fears of rising global inflation and a falling dollar, fell along with other key commodities.
Financial shares such as Mizuho Financial Group led the declines after an announcement of lower profits by Wachovia heightened concerns that the fallout from the subprime problems in the United States were spreading. A rising yen also hit Japanese exporters such as Canon.
Gold’s decline along with the dollar was somewhat paradoxical considering its traditional role as a hedge against the currency’s depreciation.
Analysts said that demand from fast-growing India, where the popularity of gold jewelry makes it one of the world’s largest consumers of the precious metal, had become a new force in the market. Any fears that India’s economy might slow or that demand for gold jewelry might suffer could also push down global prices for gold, despite a fallingdollar.
Concerns that a slowing American economy would crimp demand for bulk commodities such as copper sent other commodity prices down today. But analysts said the long-term demand remained robust thanks to strong economic growth and demand for building materials in China and India. “The general outlook for commodities is quite positive,” said Andrew Pedler, senior resources analyst at investment group Wilson HTM in Brisbane, Australia.
Renewed concerns about the health of the American economy sent Asian stocks sharply lower today, and European stocks also registered declines in early trading.
Following a dramatic decline by stock prices in the United States on Friday — the 20th anniversary of the 1987 “Black Monday” stock market crash — investors in Asia sold off stocks on worries that the United States mortgage crisis would crimp demand among American consumers for Asia’s exports.
Hong Kong’s benchmark index of share prices fell by more than 2.5 percent, while in Japan the benchmark Nikkei 225 Stock Average dropped by almost 2.4 percent. Asia’s smaller markets were also hard hit: stocks in the Philippines slid by almost 4 percent.
In Europe during early trading, London’s FTSE 100 was down 84 points, or 1.3 percent, but was trading off its lows. The German DAX stock market index was down 1.2 percent, and the Paris market had fallen by around 1.6 percent.
In Asiam the declines rekindled what analysts have been referring to as a “flight from risk,” a phenomenon that hit Asian and emerging markets after the subprime mortgage crisis erupted in late July.
“There’s going to be credit rationing and risk aversion,” said Alastair Newton, managing director and senior political analyst at Lehman Brothers. Investors, he said, “were hypnotized by returns and oblivious to risk.”
Along with a retreat from relatively risky Asian stocks, Asian currencies fell against the dollar, while the dollar dropped against major currencies such as the Japanese yen and the euro. Gold, which has been spiraling higher in recent weeks on fears of rising global inflation and a falling dollar, fell along with other key commodities.
Financial shares such as Mizuho Financial Group led the declines after an announcement of lower profits by Wachovia heightened concerns that the fallout from the subprime problems in the United States were spreading. A rising yen also hit Japanese exporters such as Canon.
Gold’s decline along with the dollar was somewhat paradoxical considering its traditional role as a hedge against the currency’s depreciation.
Analysts said that demand from fast-growing India, where the popularity of gold jewelry makes it one of the world’s largest consumers of the precious metal, had become a new force in the market. Any fears that India’s economy might slow or that demand for gold jewelry might suffer could also push down global prices for gold, despite a fallingdollar.
Concerns that a slowing American economy would crimp demand for bulk commodities such as copper sent other commodity prices down today. But analysts said the long-term demand remained robust thanks to strong economic growth and demand for building materials in China and India. “The general outlook for commodities is quite positive,” said Andrew Pedler, senior resources analyst at investment group Wilson HTM in Brisbane, Australia.
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