LONDON, 6 March 2007 — European and Asian markets fell again yesterday, extending their slide into a second week as investors worried about a possible global slowdown and dumped stocks that had surged in recent weeks. US stocks were steady in early trading.
Britain’s benchmark FTSE 100 was down 1.3 percent to 6,036.60 after slipping below the 6,000 mark earlier in the session. France’s CAC 40 slid 1.4 percent to 5,350.58 and Germany’s DAX dropped 2.1 percent to 6,492.71, following declines in Tokyo and other Asian markets.
US markets steadied in early trading yesterday, although investors remained nervous about nagging mortgage default concerns. The Dow Jones industrial average was off just 0.03 percent at 12,110.73, while broader stock indicators were down.
“The fact that the FTSE closed Friday’s session virtually unchanged may have left some thinking that the recent slide in equity markets may be at an end, but triple-digit losses on the Dow ahead of the weekend break have taken their toll on Asian markets,” said Matt Buckland, a trader at CMC Markets.
Also sparking jitters was the yen’s jump to a three-month high against the dollar as investors reversed so-called yen-carry trades. A decline in this trading practice, which involves borrowing money at Japan’s ultra-low interest rates to invest in higher-yielding assets elsewhere, could hurt global liquidity.
Tokyo’s Nikkei 225 index fell for a fifth day, tumbling 575.68 points, or 3.34 percent, to 16,642.25 points, dragged down by major exporters such as Canon Inc., Sony Corp. and Toyota Motor Corp., whose earnings are eroded by a stronger yen. Since reaching a nearly seven-year high last Monday, the Nikkei index has slid 8.64 percent.
Markets in Hong Kong, Australia, the Philippines, Malaysia, India and South Korea all fell sharply yesterday, continuing their declines from last week, when a 9 percent plunge in Chinese stocks on Tuesday triggered cascading selloffs on Wall Street and other global markets.
“I don’t know where the domino effect will stop,” said Jose Vistan, research director at AB Capital Securities in Manila, Philippines, where the benchmark index sank 4.5 percent. “Emotions are the ones driving share prices right now. Everything takes a back seat relative to the selloff that we are seeing. It’s emotions,” Vistan said. “You throw away technicals and fundamentals out the window.”
Hong Kong’s Hang Seng index tumbled 4 percent to its lowest level since mid-December. Australia’s stock market fell for a fifth day, sinking 2.3 percent. South Korea’s benchmark index dropped 2.7 percent and Indian stocks fell 4.2 percent.
Investors still seemed risk-averse after the previous week’s turmoil.
“When there’s such a big market move in such a short period of time, there’s that element of surprise and confusion,” said Teruhisa Ishikawa, section chief for investors information at Mizuho Investors Securities Co.
