As financial markets in the United States took the day off to celebrate the birthday of Rev. Martin Luther King Jr., equities markets in the Asia-Pacific region plunged on growing worries that the US economy is either already in or will soon enter a recession. Markets in Hong Kong and in India dropped more than 1,000 points each. The Hang Seng fell 1,383 points, or 5.49 percent to 23,818.86, its biggest decline since the September 11, 2001 terrorist attacks in the US. The Sensex was down 7.41 percent, losing 1,408 points to 17,605.35. Elsewhere in the region, Taiwan’s Taiex saw the least of the losses with a decline of 0.91 percent to 8,110.2. Australia’s markets extended their losses to an eleventh consecutive session when the S&P/ASX200 fell 2.9 percent to 5,580.4 and the Sydney Ordinaries dropped 2.91 percent to 5,630.9. In South Korea, the Kopsi index was 2.95 percent lower to 1,683.56. The Shanghai Composite was down 5.14 percent to 4,914.44 as it fell by 266 points while the FTSE Straits Times Index fell 6.03 percent to 2,917.15.
Tokyo’s markets also saw steep declines. The Nikkei 225 lost 535 points in a 3.86 percent loss to 13,325.94 while the Topix index was down 3.56 percent to 1,293.74 and the Mothers market of small and mid-caps dropped 3.47 percent to 656.77. Not only were investors worried about the prospect of a recession in the United States, but government reports showed that the economy had declined in several of Japan’s regions and that condominium sales in the Tokyo area were down by 20 percent in December from the previous year at the same time. In this environment, the real estate sector was lower, with Mitsubishi Estate (TYO: 8802) down 3.9 percent to ¥2,445 while Mitsui Fudosan (TYO: 8801; NAS: MDSFF) fell 4 percent to ¥2,165. Banks also saw losses on the session. Sumitomo Mitsui Financial Group (TYO: 8316) was 5.2 percent lower to ¥759,000 and Mitsubishi UFJ (TYO: 8306; NYSE: MTU) dropped 6.2 percent to ¥915.
Europe’s markets were significantly lower as well, with the FTSE Eurofirst 300 down 5.33 percent to 1,286.14. The Paris CAC-40 fell 6.83 percent to 4,744.45 and the Dax was 7.16 percent lower to 6,790.19 while the IBEX dropped 7.36 percent to 12,650.5. The Dax and the CAC-40 each had only one winner on the day. In Frankfurt, drug maker Schering (FWB: SCH) added 0.13 percent to €103.37, while in Paris Peugeot (Euronext: UG; OTC: PEUGY) was 2,69 higher to €48.82. The Steel sector saw declines. ThyssenKrupp (FWB: TKA; LSE: THK) was down 8.91 percent lower to €32.62 while Mittal Steel (Euronext: MT; NYSE: MT) fell 11.30 percent to €37.93 for the worst performance of the day on the CAC-40. Among insurers, Allianz (FWB: ALV; NYSE: AZ) was 9.99 percent lower to €37.93 and Axa (Euronext: CS; NYSE: AXA) dropped 10.08 percent to €22.12.
London’s markets also lost ground. The FTSE 100 fell 323 points for a 5.48 percent loss to 5,578.2 while the FTSE 250 dropped 419 points on the way to a 4.33 percent decline to 9,260.6. Despite the general losses, Northern Rock managed a 46.12 percent gain to 94.25p on the news that the UK government will guarantee a sale of bonds to try to attract bidders for the bank. Other gainers on the day included house builder Taylor Wimpey (LSE: TW), which added 1.44 percent to 183.7p and property developer and investor Hammerson (LSE: HMSO), which was up 0.19 percent to £10.56. Miners were lower after BHP Billiton (LSE: BLT; ASX: BHP; NYSE: BHP) declined to make another bid for Rio Tinto (LSE: RIO). BHP had the worst day on the 100 as it fell 10.38 percent to £12.35 while Rio Tinto was down 10.04 percent to £42.28. Kazakhmys (LSE: KAZ) was 9.87 percent lower to £10.41 and Anglo American (LSE: AAL) dropped 9.19 percent to £23.53.
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