Global Selloff Sparked in Asia Reaches US

123jump.com Staff
17 Aug, 2009
New York City

Global stocks decline after a sell-off that started in Asia and spreads to Europe and Americas. Resource stocks led the decliners on weak economic reading in Japan and China and worries that economic rebound may be further away than estimated.

[R]10:45 AM New York – Global stocks decline after a sell-off that started in Asia an d spread to Europe and Americas. Resource stocks led the decliners on weak economic reading in Japan and China and worries that economic rebound may be further away than estimated.[/R]

The global benchmark indexes fell after investors around the world focused on weak U.S. consumer sentiment, falling copper imports to China and weaker than expected rebound in Japan.

In China, stocks fell sharply after copper imports in July dropped 15% from June and foreign direct investment declined for the tenth month in a row. The weak data dragged commodities lower.

The economy rebounded in Japan in the second quarter from the historic lows in the first and after falling for the four quarters in a row.

The GDP in the quarter rose 0.9% or at 3.7% annualized rate on the turnaround in exports and rising industrial production to meet inventories demands.

The economic rebound follows four consecutive quarters of decline totaling nearly 9% fall and weak demand from consumers. At its worst in the fourth quarter last year the annualized fall peaked at 11.7%, revised today from the previous estimate of 14.2%.

The investors’ mood turned cautious despite recent positive economic reports. The stretched market valuations and record rebound in commodities prices have overshadowed the mild economic rebound in Germany, France and U.S.

Much of the rebound was also linked to the one-time government stimulus and domestic consumption and labor markets remain weak. Investors were also unnerved by the latest foreign direct investment from China and weak commodities import report.

Gainers & Losers

Commodities linked stocks fell sharply in Hong Kong, Australia, Canada, UK, Brazil and U.S.

Freeport McMoran Copper & Gold dropped nearly 7%, BHP Billiton dropped between 3% and 5% in New York, Sydney, London and New York, Xstrata dropped 5.5% in London and Vale S.A. declined 5.4% in New York and Sao Paolo, Brazil.

Energy related stocks also declined after crude oil futures edged lower. Exxon Mobil dropped 2.3%, BP Plc declined 1.4% in London, Total S.A. dropped 2.4% in Paris and Sunoco, Inc fell 4.3% in Toronto.

Steelmakers in China dropped their daily limit. Angang Steel and Yunan Copper, Jiangxi Copper dropped 10%.

Lowe’s declined 8.6% after it reported weaker than expected earnings and more than 9% decline in same store sales.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 328.72 or 3.10% to 10,268.61, Hang Seng index in Hong Kong decreased 755.68 or 3.62% to 20,137.65 and CSI 300 index in China lower 204.19 or 6.11% to 3,140.27. ASX 200 index in Australia decreased 72.60 or 1.63% to 4,388.40. The FTSE Bursa KL Composite index in Malaysia closed lower 19.52 or 1.64% to 1,169.05.

The Kospi Index in South Korea decreased 44.35 or 2.79% to close at 1,547.06. SET index in Thailand closed lower 22.20 or 3.39% to 632.05. The Sensex index in India decreased 626.71 or 4.07% to 14,784.92. The Indonesian Market was close today.

Europe Markets Review

In London FTSE 100 Index traded lower 86.90 or 1.84% to 4,627.07, in Paris CAC 40 Index decreased 86.29 or 2.47% to 3,408.98 and in Frankfurt DAX index traded lower 116.84 or 2.20% to 5,192.27. In Zurich trading SMI decreased 116.83 or 1.95% to 5,868.47.