Business | Markets

Asian markets plunge on unabated credit market woes

Asian stock markets tumbled on Wednesday, with Japan's Nikkei index sinking nearly 10 per cent.

  • AP
  • Published: 10:49 October 8, 2008
  • Gulf News

  • Hong Kong markets fell by 5.6 per cent.
  • Image Credit: AP

Tokyo: Asian stock markets tumbled on Wednesday, with Japan's Nikkei index sinking nearly 10 per cent, as recent steps by the world's major economies to fortify credit markets failed to stem fears that the spreading financial crisis could spawn a global recession.

After a miserable day on Wall Street when the Dow Jones industrials lost more than 500 points, investors in Asia responded by dumping stocks in a broad regional sell-off.

Japanese shares were hammered hard, with the benchmark Nikkei 225 stock average spiralling down nearly 10 per cent to 9,159 in afternoon trading to its lowest intraday level in five years.

Shares of Toyota Motor Corp. sank 12 per cent on reports that its operating profit would fall 20 percent in the fiscal year through March.

The carnage was also brutal in Hong Kong, where the blue chip Hang Seng index plunged 5.6 per cent to 15,871.

To ease the credit crunch, Hong Kong's de factor central bank said it will cut the benchmark interest rate by 1 point to 2.5 per cent.

The move represents a break from Hong Kong's traditional pattern of following the US Federal Funds target rate, which is now at 2 per cent. The authority said it has changed its formula to calculate its base rate from 150 basis points above the prevailing US fed funds rate to 50 basis points.

Australia's benchmark S&P/ASX200 shed 5 per cent, wiping out a 1.7 per cent gain on Tuesday after the country's central bank cut its key interest rate.

Asian markets were deep in the red: South Korea's benchmark index was down 6.1 per cent, Thailand's market was down 6 per cent, and Indonesia's stock market halted trading when its key index plunged 10 per cent.

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