Tuesday, 28 October 2008

Stocks fall again, Hang Seng sinks

Stocks were down again on Monday and Asian stocks again bore the brunt of the sell-off. From AFP/CNA:

Markets across the region were in freefall as traders went into a massive sell-off as fears over a global recession continued to weigh on sentiment.

Hong Kong's Hang Seng Index ended that day 12.7 percent down -- its biggest single day percentage drop since 1991 -- while Tokyo shed 6.36 percent to its lowest level since 1982.

Sydney fell 1.6 percent, Manila reeled from a 12.3 per cent plunge to its lowest in three years and Taipei dropped 4.65 per cent, while Shanghai shed 6.32 per cent.

And the Thai bourse was suspended for 30 minutes after it dived more than 10 per cent, triggering an automatic shut-down. It closed 10.50 per cent lower.

Bucking the trend, the Seoul market recovered from heavy early losses to end 0.8 per cent higher after South Korea's central bank cut its key interest rate by 75 basis points, its largest reduction yet.

The fresh turmoil came despite a pledge by the Group of Seven major economies to cooperate to bring stability to the ailing financial system.

US stocks held up better but a late sell-off left the S&P 500 down 3.2 percent for the day.

European stocks proved to be the outperformer, the DJ Stoxx 600 falling only 1.9 percent for the day.

Global deleveraging and the unwinding of carry trades were clearly driving markets as oil fell too and the yen traded near highs.

The flight from risky assets didn't help the usual safe havens though. US Treasuries also declined as the Federal Reserve launched its programme to buy commercial paper directly.

In economic news, US new home sales rose 2.7 percent in September but German business expectations continued to deteriorate in October as the Ifo index fell to 90.2 from 92.9 in September.

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