Winds of fear blow into Asia amid recession fears

Hong Kong: Asian stock markets plummeted in early trade today following carnage in the US and European markets amid fears the world was heading towards another financial crisis.

Major markets in Japan, Australia and South Korea tumbled by at least four percent in the opening minutes of trade as already-fragile investor confidence was hammered by the eurozone debt crisis and more weak US economic data.

Fears that the economy is sliding back toward recession and a recent jump in Italian and Spanish bond yields toward danger levels have driven investors to seek cover.

US stock futures were slightly higher after major US markets fell by 4-5 percent overnight, but employment figures due later in the day could trigger further selling if the jobs picture disappoints.

Complicating matters was that Japan and Switzerland have intervened this week to weaken their currencies, which were considered the safest in the developed world. That has caused some safety-seeking investors to think twice about stashing money there when financial market volatility is spiking.

In an interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee, VK Sharma, head of private broking and wealth management at HDFC Securities gave his reading of the market in India.

“It’s going to be very ugly end to an even uglier week,” IG Markets analyst Ben Potter said in Sydney, adding that all sectors were expected to take a battering.

Australia’s benchmark S&P/ASX 200 was 174 points lower at 4,102, while in Tokyo the Nikkei index plunged 395.09 points, or 4.09 percent, to stand at 9,264.09.

In Seoul, the benchmark KOSPI index fell 81.30 points, or 4.0 percent, to 1,937.17 - the lowest level since March.

The winds of fear blew into Asia overnight from the United States, where the Dow Jones Industrial Average suffered its worst one-day drop since December 2008 to close 4.3 percent lower at 11,383.68, erasing all this year’s gains.

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 percent to 2,556.39.

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

Oil tumbles

Oil prices fell in Asian trade today after plunging more than five percent overnight as the weakening global economy and eurozone debt crisis threatened energy demand.

New York’s main contract, West Texas Intermediate light, sweet crude for delivery in September, was down 92 cents to $85.71 a barrel in morning trade after plunging $5.30, or 5.8 per cent, in US trade yesterday.

Agencies