Asian stock markets were mauled on Tuesday. AFP/CNA reports:
Asian stocks slumped Tuesday with Tokyo shedding more than 10 percent as Japan's nuclear crisis deepened after two more blasts and a fire at an atomic power plant...
The Nikkei index ended down 10.55 percent, or 1,015.34 points, at 8,605.15, its heaviest loss since the fall of Lehman Brothers in late 2008, and followed Monday's loss of 6.18 percent.
Hong Kong fell 2.86 percent, or 667.63 points, to close at 22,678.25 while Shanghai lost 1.41 percent, or 41.37 points, to end at 2,896.26.
Sydney plunged 2.11 percent, or 97.7 points, to 4,528.7 and Seoul shed 2.40 percent, or 47.31 points, to 1,932.92.
By the US close, though, investors had calmed somewhat. From Reuters:
U.S. stocks fell 1 percent but ended far from session lows on Tuesday on the Federal Reserve's more upbeat economic view and growing sentiment that Japan's nuclear crisis would only temporarily depress shares...
Equities nearly halved their losses after the Fed stuck with its ultra-loose monetary policy and said the economy was gaining traction...
The Dow Jones industrial average was down 137.74 points, or 1.15 percent, at 11,855.42. The Standard & Poor's 500 Index was down 14.52 points, or 1.12 percent, at 1,281.87. The Nasdaq Composite Index was down 33.64 points, or 1.25 percent, at 2,667.33.
Bloomberg reports the Fed's decision on Tuesday:
Federal Reserve policy makers said U.S. growth is becoming more durable and higher energy prices will have a temporary effect on inflation as they affirmed plans to buy $600 billion of Treasuries through June.
“The economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually,” the Federal Open Market Committee said today in a statement after a one-day meeting in Washington. The inflation effects of increased commodity costs will be “transitory,” and officials “will pay close attention to the evolution of inflation and inflation expectations,” the Fed said.
US data had also pointed to improvements in the economy. Bloomberg reports:
Strength in U.S. manufacturing from earlier this year continued into March, a Fed report showed. The Fed Bank of New York’s general economic index rose to a nine-month high of 17.5 from 15.4 in February. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut...
Another report today showed confidence among U.S. homebuilders rose in March to the highest level since May 2010. The National Association of Home Builders/Wells Fargo sentiment index climbed to 17 from a February reading of 16 as more firms anticipated stronger sales in the next six months. Measures less than 50 mean more respondents said conditions were poor.
But with the economy improving, inflation is making a return.
The cost of goods imported into the U.S. rose more than forecast in February, led by further gains in commodities that companies are struggling to pass along to their customers.
The 1.4 percent increase in the import-price index exceeded the 0.9 percent median estimate in a Bloomberg News survey and followed a 1.3 percent rise in January, Labor Department figures showed today in Washington. A measure of prices paid by factories in the New York region jumped this month to the highest level since August 2008, according to another report that also showed manufacturing picked up.
Europe, though, was hit by another sovereign credit rating downgrade. Bloomberg reports:
Portugal’s long-term debt rating was cut two steps by Moody’s Investors Service, which cited a “subdued” growth outlook, risks to implementing the government’s deficit-reduction plans, and a possible need to recapitalize its banks.
The rating was downgraded to A3 from A1, the company said today in an e-mailed statement, adding that the outlook is “negative.” The euro weakened against the dollar after Moody’s announcement, to $1.3978 per euro from $1.3998.