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Monday, 6 October 2008
Stocks Fall Sharply in Europe and Asia; New York Set to Tumble
Stocks tumbled Monday in Europe and Asia, and oil fell below $90 for the first time since February, on growing fears that the financial crisis is spreading to the world economy.
Stocks Fall Sharply in Europe and Asia; New York Set to Tumble
By David Jolly and Keith Bradsher 6 October 2008
PARIS: Stocks tumbled Monday in Europe and Asia, and oil fell below $90 for the first time since February, on growing fears that the financial crisis is spreading to the world economy.
European markets slid at the opening, a day after governments in the region were left scrambling to prevent the collapse of two lenders, Hypo Real Estate in Germany, and the Belgian operations of Fortis. The German government also said Sunday that it would guarantee all private bank deposits as it sought to avert the spread of the financial contagion.
In early trading, the FTSE 100 index in London was down 4.4 percent, while the DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 4.0 percent. It has become common for banking sector shares to fall this year, but on Monday, Shares of industrial companies were also hammered, with EADS, the parent of Airbus, falling 7.5 percent, ArcelorMittal, the world’s biggest steel maker falling 8.6 percent, and the German automaker Daimler falling 5.8 percent. British Airways fell 10.3 percent.
Total, the French oil company fell 4.5 percent on heavy volume, as oil futures for November delivery on the New York Mercantile Exchange fell as low as $3.92 to $89.96 a barrel on the New York Mercantile Exchange. Royal Dutch Shell fell 5 percent.
“Governments are making progress in sorting out problems in the banking sector, but there’s a growing realization that they are not in a position to deal with the economic slowdown that’s coming,” Graham Neale, director at Killik & Co. told Reuters.
BNP Paribas, which acquired a majority stake in Fortis for about $20 billion in an emergency deal late Sunday, was unchanged, while shares of Fortis were suspended. Trading in Unicredit, the big Italian bank, was delayed for one hour after the bank said late Sunday that it would seek €6.6 billion, or about $9.1 billion, in new funding and cut its earnings outlook. And Hypo Real Estate, the second-biggest German mortgage lender, fell 28 percent in Frankfurt after it received a new $68 billion bailout Sunday from the German banks and the national government in Berlin.
That followed a similar sell-off in Asia, where the Nikkei 225 stock average in Tokyo fell 4.3 percent, while the Kospi index in Seoul fell 4.4 percent. The Standard and Poor’s/ASX 200 index in Sydney fell 3.3 percent, while the Hang Seng index in Hong Kong fell 6.3 percent.
Trading patterns in futures markets suggested that the selloff was a foretaste of another weak opening Monday on Wall Street, despite the passage Friday in Washington of the U.S. Treasury’s $700 billion financial sector bailout plan. Futures contracts on the Dow Jones industrial averages were pointing to an opening fall of about 1.6 percent.
Nicholas Bibby, an economist in the Singapore office of Barclays Capital, said that falling share prices showed that many investors were still worried that banking difficulties might spread even after the passage of the U.S. economic bailout plan.
“It’s a fear of contagion,” he said, while adding that Asian banks were better positioned than most to withstand the current problems because the region’s high savings rate tends to mean that Asian banks are net lenders in international money markets.
Concerns about Asian exports have also been rising for months, as the region’s high savings rate means that it also has weak spending on consumption and remains heavily dependent on overseas demand.
CFC Seymour, a Hong Kong securities firm, pointed out in an investment newsletter on Monday that even before recent problems in financial markets, the combined trade balance of Japan, South Korea, Taiwan, Thailand, Indonesia and the Philippines had gone from a surplus of $19 billion as recently as last October to a deficit of $2 billion in July. Only China is still running consistently large trade surpluses.
The realignment in the currency market that has lifted the dollar and yen against the euro continued, as investors worried about Europe’s banks and economic health and continued their flight to the apparent stability of Japan’s financial system. The euro fell to $1.3609 in Paris morning trading, from $1.3772 in New York late Friday. The dollar fell to ¥103.42 from ¥105.32, and the euro declined to ¥140.74 from ¥145.07.
The Shanghai stock exchange, closed for the past week for China’s National Day holiday, reopened on Monday with the Shanghai A-share market down 3.5 percent. The Shanghai stock exchange, closed for the past week for China’s National Day holiday, reopened on Monday morning with the Shanghai A-share market down 3.5 percent.
The China Securities Regulatory Commission announced on Sunday that it would experiment with the introduction of short-selling and trading on margin on a limited basis, but did not say when the trial would begin.
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Stocks Fall Sharply in Europe and Asia; New York Set to Tumble
By David Jolly and Keith Bradsher
6 October 2008
PARIS: Stocks tumbled Monday in Europe and Asia, and oil fell below $90 for the first time since February, on growing fears that the financial crisis is spreading to the world economy.
European markets slid at the opening, a day after governments in the region were left scrambling to prevent the collapse of two lenders, Hypo Real Estate in Germany, and the Belgian operations of Fortis. The German government also said Sunday that it would guarantee all private bank deposits as it sought to avert the spread of the financial contagion.
In early trading, the FTSE 100 index in London was down 4.4 percent, while the DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 4.0 percent. It has become common for banking sector shares to fall this year, but on Monday, Shares of industrial companies were also hammered, with EADS, the parent of Airbus, falling 7.5 percent, ArcelorMittal, the world’s biggest steel maker falling 8.6 percent, and the German automaker Daimler falling 5.8 percent. British Airways fell 10.3 percent.
Total, the French oil company fell 4.5 percent on heavy volume, as oil futures for November delivery on the New York Mercantile Exchange fell as low as $3.92 to $89.96 a barrel on the New York Mercantile Exchange. Royal Dutch Shell fell 5 percent.
“Governments are making progress in sorting out problems in the banking sector, but there’s a growing realization that they are not in a position to deal with the economic slowdown that’s coming,” Graham Neale, director at Killik & Co. told Reuters.
BNP Paribas, which acquired a majority stake in Fortis for about $20 billion in an emergency deal late Sunday, was unchanged, while shares of Fortis were suspended. Trading in Unicredit, the big Italian bank, was delayed for one hour after the bank said late Sunday that it would seek €6.6 billion, or about $9.1 billion, in new funding and cut its earnings outlook. And Hypo Real Estate, the second-biggest German mortgage lender, fell 28 percent in Frankfurt after it received a new $68 billion bailout Sunday from the German banks and the national government in Berlin.
That followed a similar sell-off in Asia, where the Nikkei 225 stock average in Tokyo fell 4.3 percent, while the Kospi index in Seoul fell 4.4 percent. The Standard and Poor’s/ASX 200 index in Sydney fell 3.3 percent, while the Hang Seng index in Hong Kong fell 6.3 percent.
Trading patterns in futures markets suggested that the selloff was a foretaste of another weak opening Monday on Wall Street, despite the passage Friday in Washington of the U.S. Treasury’s $700 billion financial sector bailout plan. Futures contracts on the Dow Jones industrial averages were pointing to an opening fall of about 1.6 percent.
Nicholas Bibby, an economist in the Singapore office of Barclays Capital, said that falling share prices showed that many investors were still worried that banking difficulties might spread even after the passage of the U.S. economic bailout plan.
“It’s a fear of contagion,” he said, while adding that Asian banks were better positioned than most to withstand the current problems because the region’s high savings rate tends to mean that Asian banks are net lenders in international money markets.
Concerns about Asian exports have also been rising for months, as the region’s high savings rate means that it also has weak spending on consumption and remains heavily dependent on overseas demand.
CFC Seymour, a Hong Kong securities firm, pointed out in an investment newsletter on Monday that even before recent problems in financial markets, the combined trade balance of Japan, South Korea, Taiwan, Thailand, Indonesia and the Philippines had gone from a surplus of $19 billion as recently as last October to a deficit of $2 billion in July. Only China is still running consistently large trade surpluses.
The realignment in the currency market that has lifted the dollar and yen against the euro continued, as investors worried about Europe’s banks and economic health and continued their flight to the apparent stability of Japan’s financial system. The euro fell to $1.3609 in Paris morning trading, from $1.3772 in New York late Friday. The dollar fell to ¥103.42 from ¥105.32, and the euro declined to ¥140.74 from ¥145.07.
The Shanghai stock exchange, closed for the past week for China’s National Day holiday, reopened on Monday with the Shanghai A-share market down 3.5 percent. The Shanghai stock exchange, closed for the past week for China’s National Day holiday, reopened on Monday morning with the Shanghai A-share market down 3.5 percent.
The China Securities Regulatory Commission announced on Sunday that it would experiment with the introduction of short-selling and trading on margin on a limited basis, but did not say when the trial would begin.
Keith Bradsher reported from Hong Kong.
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