Markets today: Freefalling Japan index plummets 9.6%
HONG KONG -- World stock markets followed Wall Street over a cliff Friday, plunging from Seoul to Singapore, and then across Europe, after an overnight sell-off in New York. A key Japan index swan-dived 9.6%.
Stocks on some markets swung so wildly that trading was suspended, in some cases for the rest of the day. Trading was interrupted in various places such as as Russia, Indonesia, Thailand and Austria. Steep, initial dives in places such as Britain — where a key index fell 10% just after trading opened — and Turkey were not enough to shutter those markets, however.
Tokyo's benchmark Nikkei index plummeted more than 9.6% and finished the week down 24%, twice what it lost during the week of the October 1987 stock market crash. Hong Kong's Hang Seng index lost 7.2%, Seoul's Kospi index nearly 4%, Singapore's Straits Times index more than 8%.
"There's too much uncertainty in the market," said Sherman Chan, economist with Moodys Economy.com in Sydney, Australia. "Confidence is really weak."
The Asian markets took their lead from Wall Street, where to Dow Jones industrial average tumbled 7.3% Thursday to close below 9,000 for the first time in five years. The Dow has now dropped 2,271 points in the last seven trading days — worst 7-day performance ever.
"The U.S. and advanced economies' financial systems are now headed toward a near-term systemic financial meltdown...Day after day, stock markets are in free fall," New York University economist Nouriel Roubini wrote on his website. "We have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies."
Morgan Stanley on Friday cut its estimate for Japan's economic growth this year by half to 0.4% and predicted that the Japanese economy would contract by 1% in 2009.
Stocks are collapsing despite a coordinated effort by central banks around the world to cut interest rates this week and flood markets with liquidity. "People have been speculating for weeks about a coordinated rate cut," Moodys Chan said. "Finally it comes, but too late."
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