Asian stocks track Wall St as credit worries resurface
Wednesday, 17 October 2007
SINGAPORE, Oct 16 (Newstex): Stock markets across Asia fell Tuesday, tracking Wall Street's decline on renewed concerns about the crisis in credit markets and worries that record oil prices will dampen consumer spending in an already slowing economy.
The Chinese market bucked the trend with the Shanghai composite setting yet another record as investors continue to buy into China's growth story. The Hang Seng reached record levels early in the day before falling back.
Major US benchmarks closed lower overnight after Citigroup (NYSE:C) , JP Morgan and Bank of America (NYSE:BAC) announced the creation of a fund that will be used to help revive the asset-backed commercial paper market. The fund will buy assets from structured investment vehicles, or SIVs, which buy corporate bonds and subprime mortgage debt. The bailout was orchestrated by the Treasury Department to avoid a fire sale in the market.
The announcement was a reminder that the credit crisis that was triggered by the meltdown in the subprime mortgage sector has not gone away. Global stock markets appear to have largely set aside worry about the credit markets since the Federal Reserve's aggressive rate cut in September. Most indices -- including US indices -- have rallied back to pre-crisis levels and benchmarks in China, Australia, Indonesia, the Philippines and South Korea have climbed to record levels.
Fed chairman Ben Bernanke said late Monday that conditions in the credit market have improved but that a full recovery will take time. Bernanke also said the deepening housing slump probably will be a 'significant drag' on economic growth into next year.
Singapore's Straits Times Index fell 1.3 pct to 3,810.72.
The Nikkei closed down 1.3 pct at 17,137.92 and the broader TOPIX fell 1.9 pct to 1,625.25.
The Chinese market bucked the trend with the Shanghai composite setting yet another record as investors continue to buy into China's growth story. The Hang Seng reached record levels early in the day before falling back.
Major US benchmarks closed lower overnight after Citigroup (NYSE:C) , JP Morgan and Bank of America (NYSE:BAC) announced the creation of a fund that will be used to help revive the asset-backed commercial paper market. The fund will buy assets from structured investment vehicles, or SIVs, which buy corporate bonds and subprime mortgage debt. The bailout was orchestrated by the Treasury Department to avoid a fire sale in the market.
The announcement was a reminder that the credit crisis that was triggered by the meltdown in the subprime mortgage sector has not gone away. Global stock markets appear to have largely set aside worry about the credit markets since the Federal Reserve's aggressive rate cut in September. Most indices -- including US indices -- have rallied back to pre-crisis levels and benchmarks in China, Australia, Indonesia, the Philippines and South Korea have climbed to record levels.
Fed chairman Ben Bernanke said late Monday that conditions in the credit market have improved but that a full recovery will take time. Bernanke also said the deepening housing slump probably will be a 'significant drag' on economic growth into next year.
Singapore's Straits Times Index fell 1.3 pct to 3,810.72.
The Nikkei closed down 1.3 pct at 17,137.92 and the broader TOPIX fell 1.9 pct to 1,625.25.