Markets now: Asia stocks dive after U.S. kills bailout proposal
HONG KONG -- Stocks plummeted across Asia in panic selling following the U.S. House's rejection of a $700 billion Wall Street bailout.
Japan's benchmark Nikkei 225 index nose-dived more than 544 points, or 4.6%, to 11,199.07, with popular stocks like Sony down 6.8% and Toyota Motor down 4.6%. by midday trading. Hong Kong's Hang Seng Index plunged 5.5%. In the South Korean capital Seoul, the Kospi index lost 3.5%. And in Singapore, the Straits Times Index fell nearly 3%.
Asian markets had fallen Monday, unimpressed by the bailout package engineered over the weekend by Treasury Secretary Henry Paulson and congressional leaders. But they were even more dismayed Tuesday by the possibility there might be no deal at all — or a long delay. Asians are worried about continuing financial turmoil and a U.S. recession, which would smother demand for Asian exports.
In an on-line analysis of the Asian market reaction Tuesday, Moody's Economy.com blamed Congress for "destroying hopes that the global financial market turmoil would soon come to an end … The longer it takes for a rescue package to take effect in the market, the more severe the U.S. recession will be."
"This is a hint of what will happen if they don't pass a rescue," said Song Seng Wun, regional economist at the CIMB-GK investment firm in Singapore. "It could be 10 times worse."
He predicts Congress will come through with a bailout that holds "Wall Street more accountable … Fat cats will be made to pay more for their excesses.
"Something will be passed."
Related Stories
ABC News Live