Nikkei Falls Nearly 10%, Asian Markets Tank on Opening

The bloodbath continues, largely in reaction to the bad economic news reports in the US . From Bloomberg:

Asian stocks tumbled, driving Japan’s Nikkei 225 Stock Average down as much as 10 percent, as concern deepened that the global economy is headed for a recession after U.S. retail sales fell….

“Investors are still pricing in a global recession” said Hiroshi Morikawa, who helps manage $14 billion as senior strategist at Tokyo-based MU Investments Co. “We prefer to wait, maybe until next year, before making any new investments. We’re holding cash.”

The MSCI Asia Pacific Index lost 5.9 percent to 89.51 at 10:49 a.m. in Tokyo, extending yesterday’s 1.6 percent decline. The measure is still up 4.1 percent this week after rallies at the start triggered by a $2 trillion global bank rescue.

Japan’s Nikkei 225 Stock Average dropped 10 percent to 8,591.59. The decline caused trading in Nikkei futures to be temporarily halted. South Korea’s Kospi Index retreated 6.3 percent. All benchmark indexes in the region sank.

Standard & Poor’s 500 Index futures fell 1.2 percent. Treasuries were little changed and the Japanese yen climbed toward a seven-month high against the dollar.

Japan’s Prime Minister Taro Aso said today a $250 billion U.S. bank bailout plan is “insufficient” and “that’s why markets are falling.” Aso was speaking to lawmakers in parliament.

From the Wall Street Journal:

Asian markets dropped sharply early Thursday as fears about a U.S. recession hit exporters such as Honda Motor in Tokyo, while Rio Tinto tumbled more than 14% in Sydney on concerns global demand for commodities is weakening.

Japan’s Nikkei 225 Average lost 9.7% to 8617.44, while the broader Topix index shed 8.3% to 876.54.

Australia’s S&P/ASX 200 index lost 5.5% to 4065.80 and New Zealand’s NZX 50 index gave up 4.3% to 2780.90. South Korea’s Kospi slumped 6.2% to 1256.98.

“It’s clear that Asia won’t be able to escape the financial crisis unscathed, with the U.S. banking crisis now spreading around the world,” wrote Merrill Lynch analysts in a report. “However, unlike their counterparts in Europe and the U.S., the financial problems are less deep-rooted and widespread in Asia.”

Shares of Rio Tinto tumbled 14.3% in Sydney a day after the resources giant said the global financial crisis will force it to delay a planned sale of $10 billion of assets. The company added that China wasn’t immune to the global downturn and that the company may freeze capital expenditure as it reassesses commodity demand amid a looming global slowdown.

Shares of regional exporters tumbled on worries about slowing global demand, with Honda Motor shedding 10.4% and Sony losing 10.9% in Tokyo, while Hyundai Motor lost 5.9% in Seoul.

Shares of Mazda Motor fell 4.9%, on top of their 9.2% decline Wednesday, after the Nikkei business daily reported that U.S. automaker Ford Motor has asked Denso to purchase a part of its 33.4% stake in Mazda. The report added that Denso, which wants to expand business with Mazda, is likely to consider purchasing some of the shares.

Steelmakers and shipping stocks also dropped sharply on worries about global demand, with JFE Holdings shrinking 13.1% in Tokyo and Mitsui O.S.K. Lines losing 11.3% in Tokyo. In Seoul, Posco gave up 9%, while STX Pan Ocean fell 9.1%.

In the financial sector, Mizuho Financial Group lost 11.5% and Sumitomo Mitsui Financial Group slumped 14% in Tokyo, while Macquarie Group lost 7.8% in Sydney. In Seoul, shares of Industrial Bank of Korea shed 11.7%.

Shares of Citigroup lost 11.6% after the Nikkei business daily reported the banking giant is considering delaying the merger of its retail brokerage firm Nikko Cordial Securities with its corporate securities business Nikko Citigroup.

Energy-related stocks tumbled after November crude-oil futures fell $4.09 to $74.54 a barrel on the New York Mercantile Exchange overnight, ending at their weakest level in more than a year. The front-month contract recently dropped as much as $1.25 to $73.29 a barrel in electronic trading.

Shares of BHP Billiton gave up 9.8% and Woodside Petroleum lost 3.5% in Sydney, while commodity trader Mitsubishi declined 10.8% in Tokyo.

In Asian currency trading, the U.S. dollar bought 99.79 yen, compared with 101.34 yen late Wednesday.

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  1. walter

    yves, I have deleted this message many times over the last few weeks. Thank you for the information and comments you provide. I am a high schol teacher in rochester , ny at an alternative high school. I teach a course called The Pursuit of Truth: Journalism, Econoics and Global Issies”, This is the second year I’ve taught this course ( yeah my timing is always off, I thought this crisis would happen last year” I’m pursuing forward with the information here and educating my kids on global and national economic isssues, by also teaching them budgeting skills and creating a cookbook, “good food for bad times” , (hey i teach in an urban enviornment and I can already see some of the ramifications, I cook for my kids twice a week and pay for a copy of the new york times for each of them daily, they read, we discuss and i try to add insights form all over the internet (;_) thanks yves) (even if my kids can’t) Thank you for all the energy and insightsw you prvid (all of you I look at these comments for analysis and insights) anyway thank you for a great site, and all of the readers for their great insights.
    Walter Jahnke

  2. doubledog

    Jesus, Walter, we’ve all known its coming but at least spellcheck your comment. Our great country is only as good as it’s educators…..
    Dave Schwieder

  3. Anonymous

    Funny how we haven’t heard much of late as to how this whole decline was caused by evil short sellers targeting particular stocks.The Australian stock market has imposed a ban on all short selling of all stocks – naked or covered – since Sept 22. It has pretty well been cliff diving ever since, but at least we have been saved from the short sellers who no longer rate a mention. Wonder what will happen when this ban is lifted after 30 days ?

  4. Anonymous

    Countries are now grasping at straws that broke the camel’s back. I don’t see any signs of hope as the financial situation begins the spiral ride down the toilet. A rush to cash is the name of the game now. Sell Sell. The guaranteeing of deposits will not prevent draw downs to pay bills and survival needs when the failing economy hits depression mode furthering the loss of bank’s funny money intra-day follies.

    Good luck, we all will need some.

  5. doc holiday

    Don’t short sake!

    There are four types of tokutei meishōshu (actually six, due to mixing and matching the junmai and ginjō varieties).
    honjōzō-shu (本醸造酒), with a slight amount of distilled alcohol added. The distilled alcohol helps pull some extra flavors out of the mash. This term was created in the late 1960s to distinguish it (a premium, flavorful sake) from cheaply made liquors to which large amounts of alcohol were added simply to increase volume and/or give it a high alcohol content.
    junmai-shu (純米酒, literally “pure sake”), made from rice only. Before 2004, the Japanese government mandated that at least 40% of the rice be polished away, with no alcohol added, if the sake was to be considered junmai. Today, it can represent any sake milled to any degree, that contains no additives or distilled alcohol.
    ginjō-shu (吟醸酒), rice weight polished to 40% or less.
    daiginjō-shu (大吟醸酒), rice weight polished to 50% or less.
    The term junmai can be added in front of either ginjō or daiginjō if no alcohol is added to result in either junmai ginjō or junmai daiginjō. However, distilled alcohol often is added in small amounts to ginjō and daiginjō to heighten the aroma, not to increase volume, so a junmai daiginjō without added alcohol is not necessarily a better product than daiginjō. In fact, most brews that win the gold medals at the Hiroshima Kanpyōkai (one of the most prestigious judging events) cannot be called junmai due to the small amounts of alcohol added.

    Is that off topic?

  6. paddy

    Keep up the good work Walter. You’re doing a more important (but unfortunately less well paid) job than most of the people who read here, I would say. And doubledog, read between the lines, an “alternative school” is more about teaching life skills and less emphasis on formal academic skills. Hence, the more “electronic” style of english, typical of younger people. I certainly appreciate hearing his view.

  7. Glen

    As an Australian reader of your excellent site, our Prime Minister announced a special “one off” payment (read cash handout) to get the economy moving. As we all know, the US tried the same thing an it tanked. As Australians have the propensity to spend $1.60 for every dollar of income all I can only surmise is that our illustrious leaders only intent is to increase the number of plasma tv’s per household consequently national debt.

    On top of this, our PM doubled the first home buyers grant to $14k and the result? House prices have crept up accordingly. Master stroke Kevin – you’re awesome!. This is the worst part of the scheme – encouraging people to buy homes over priced homes when the economy is slowing and unemployment is rising. It’s all going to end in tears.

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