Stocks reel as Japan sinks further

Monday, March 9, 2009 at 9:58 PM Posted by Beijing News


Asian stocks went into tailspin on Monday after new data showed a deepening recession in Japan, while European and US stocks inched downwards amid fresh banking and economic worries.

"The stock market is reflecting ongoing concerns regarding the recession," said Fred Dickson at DA Davidson, a US financial consultancy.

"The biggest problem remains turmoil in the financial system even after massive multi-trillion dollar cash injections," he said.

On Wall Street, the Dow Jones lost 0.40 percent and the Nasdaq index fell 1.45 percent in afternoon trading.

And that was despite a 41.1-billion-dollar stock and cash deal announced by US pharmaceutical giant Merck to buy rival Schering-Plough.

"The market has not been moved by this major deal like it would have been a few years ago," said Patrick O'Hare at .

"The muted response speaks to the festering concerns about the economy and the notion that it won't be a quick recovery," he said.

In Europe, London's FTSE 100 index of leading shares inched up 0.33 percent while the Paris CAC 40 fell 0.60 percent.

Swiss stocks fell 0.09 percent, the Netherlands was down 0.13 percent, while Milan shed 1.64 percent and Madrid 1.72 percent. Meanwhile Belgian stocks were up 1.69 percent.

Setting a more optimistic tone, central bankers from a group of leading economies said the beginning of a global economic rebound was approaching.

But investment guru Warren Buffett warned recovery in the United States could take five years.

"I've never seen Americans more fearful," Buffett, one of the world's richest men, said in a CNBC television interview. "It takes five minutes to become fearful, much more time to regain confidence."

The main fallout on Monday came from news of Japan's first current account deficit for more than a decade, which sent Asian stocks plunging.

The Nikkei stock index fell 1.21 percent to a 26-year low. Hong Kong shed 4.8 percent, Shanghai fell 3.39 percent and Singapore gave up 3.71 percent.

"The Japanese economy has continued to deteriorate rapidly, and is in a severe state," vice finance minister Kazuyuki Sugimoto told reporters. "The deterioration is likely to continue for a while."

Norio Miyazaki, an economist at Shinko Research Institute, said: "Exports are crumbling at a speed never seen before... There is no way out of the current situation for Japan for a while."

"Japan is dependent on overseas demand, so the economy is unlikely to recover unless exports pick up again," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Prime Minister Taro Aso said last week there was "no bottom in sight" for Asia's biggest economy, adding to the glum mood on markets.







Kasahara

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