Asian stocks plunge, Europeans follow

FE Team | Published: October 11, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

Asian stocks tumbled, driving Japan's Nikkei 225 Stock Average to its biggest weekly decline on record, on concern the deepening credit crisis will push the global economy into a recession. The yen surged, report agencies.
Europe's stock markets plunged Friday after Wall Street opened a breathtaking 7 per cent lower - below the 8,000 level - but they soon recouped some of those losses when the Dow Jones index made a partial comeback.
Following the Dow's modest retracement, the FTSE was trading 282.94 points, or 6.6 percent, lower at 4,030.86 in afternoon trading London time, while the DAX was down 401.92 points, or 8.2 percent, at 4,485.08. France's CAC-40 was 284.43 points, or 8.3 percent, lower at 3,158.27.
The Dow Jones industrial average .DJI slid 401.27 points, or 4.68 percent, to 8,177.92. The Standard & Poor's 500 Index .SPX was down 6.43 percent, or 58.48 points, at 851.44. The Nasdaq Composite Index .IXIC was down 69.09 points, or 4.20 percent, at 1,576.03.
The Dow's eight-day decline of nearly 25 percent is the largest since the plunge ending Oct. 26, 1987. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
The Dow's abysmal opening prompted further losses on Europe's stock markets, with Germany's DAX down nearly 12 percent at one stage and Britain's FTSE 10 percent lower.
Smaller markets also took a beating. Trading was suspended for various times in Austria, Russia, Iceland, Romania and Ukraine while Milan suspended share dealings in nearly half of its stocks because of excessive losses.
The MSCI Asia Pacific Index lost 6.4 percent to 86.42 as of 7:12 p.m. in Tokyo. The measure has dropped 17 percent this week, the biggest slump since the index was created on Dec. 31, 1987. The index, down 45 percent this year, now trades at 10 times estimated earnings.
The yen rose to 99.39 per dollar, up 6 percent this week, the most in a decade as investors cut holdings of higher-yielding assets funded in the Japanese currency.
Japan's Nikkei plunged 9.6 percent to 8,276.43. The gauge slumped 24 percent this week, the steepest decline since 1949, when data began. Hong Kong's Hang Seng Index lost 7.2 percent, capping a 16 percent weekly plunge. That's the most since January 1998.
Australia's S&P/ASX 200 Index tumbled 8.3 percent, the most since the October 1987 crash, led by National Australia Bank Ltd. Trading was suspended for 30 minutes on Thailand's SET Index, triggered by a 10 percent slump. Taiwan is closed for a holiday.
Insurers followed banks as some of the worst underperformers, under pressure after the second largest U.S. insurer, Prudential Financial (PRU.N: Quote, Profile, Research, Stock Buzz), warned on quarterly profits on Thursday, sending its shares down by more than 23 percent.
This was followed by news Friday that Japan's Yamato Life Insurance Co, an unlisted midsized insurer, became the first Japanese financial institution to collapse due to global market turmoil stemming from the subprime crisis.
In Vienna, the stock exchange has been suspended until midday after stocks tumbled 10 percent at the opening bell, and in Russia representatives of the MICEX and RTS exchanges said they suspended regular trading until further notice under orders from financial regulators.
Finance ministers and central bankers from the Group of Seven industrialized nations are due to meet later Friday in Washington to address the financial meltdown but analysts are skeptical that they can do anything to soothe concerns about the world economy. US President George W Bush is due to make an address to the American people later in the day.
"I don't know what they can do. The actions of governments and central banks have had no effects, they haven't freed up credit markets and not inspired confidence in stock markets," said David Jones, chief markets strategist at IG Index.