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Asian stocks slide as global market rally fades

TOKYO - Asian share prices were hammered Monday as a global stock market rally fizzled out amid renewed pessimism about the US economic outlook and a plunge in Chinese stocks, dealers said.

They said that investors fled to safe havens such as bonds and gold as markets around the region slumped deep into the red in the wake of losses on Wall Street, with Shanghai plunging by about 7.2 percent.

Hong Kong was down almost 6.0 percent in afternoon trade and Singapore tumbled by about 5.0 percent. Tokyo ended down nearly 4.0 percent as Seoul lost 3.85 percent. Indian share prices slid about 4.6 percent in morning deals.

In Europe, investors were bracing for another wild ride when trading resumed.

Sentiment remained fragile in the wake of last week’s rollercoaster performance that saw global shares slump on fears of a US recession before rebounding sharply following a hefty US interest rate cut and an economic stimulus plan.

“The market is fluctuating wildly,” said Francis Lun, general manager at Fulbright Securities in Hong Kong.

“Investors don’t have the appetite to buy stocks now.”

Chinese share prices were hit by worries about the US economy and severe winter weather at home.

After last week’s emergency US interest rate cut, many investors are hoping that the Federal Reserve will deliver another dose of monetary medicine at the end of a two-day meeting on Wednesday.

The fear is that stocks could resume their decline if the Fed fails to deliver the quarter-point reduction many traders are betting on.

Market views are also mixed about whether the central bank’s efforts will be enough to prevent the US economy from slipping into recession.

“If the Fed makes another rate cut, the market will be likely to take the decision positively,” said Mizuho Research Institute senior analyst Koji Takeuchi.

“But the market may turn cautious, as there are expectations that the forthcoming data may revive concerns about the US economy,” said Takeuchi.

US President George W. Bush was scheduled to deliver his annual State of the Union address later Monday, while key US jobs data due Friday will be keenly awaited for fresh clues on the health of the world’s largest economy.

“Many investors are taking a wait-and-see attitude ahead of a series of events this week,” said Won Jong-Hyuck, an analyst at SK Securities in Seoul.

“All eyes will be on whether the upcoming US job market data will meet the consensus or not, given that the December data were a key culprit in the heightened volatility in global financial markets.”

US figures due this week will provide snapshots on existing home sales, consumer confidence, auto sales and the job market, among other surveys.

“The volatile market is expected to persist until the big economic events are played out. But the market may now be in the process of establishing a near term bottom,” said Mitsushige Akino, chief fund manager at Ichiyoshi Management in Tokyo.

In New York, the blue-chip Dow Jones Industrial Average slipped 1.38 percent Friday to close at 12,207.17, capping a tumultuous week.

World oil prices fell in Asian trade Monday as market players remained wary about prospects for the global economy, with New York’s light sweet crude for delivery in March down 90 cents at 89.81 dollars per barrel.

On the foreign exchange market, the dollar was mixed as investors waited for the Fed meeting and Bush’s State of the Union address, dealers said.