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Asian markets hit by credit woes | Asian markets hit by credit woes |
(about 1 hour later) | |
Asian markets have plunged amid renewed fears about the US economy, echoing heavy falls on Wall Street. | |
Japan's Nikkei index lost 2.1%, or 352.9 points, to close at 16,517.5, while Hong Kong's Hang Seng fell 3.2%. | |
Earlier the Dow Jones had shed 2.6%, after two leading banks had their ratings downgraded by brokers. | |
There are also concerns that US interest rates may not drop further after the Federal Reserve warned of a risk of inflation after its latest cut. | There are also concerns that US interest rates may not drop further after the Federal Reserve warned of a risk of inflation after its latest cut. |
The price of oil, which climbed above $96 a barrel on Thursday before retreating to around $93, had also made investors nervous. | |
Spending tightened | Spending tightened |
While stocks in the US had risen on Wednesday after the Federal Reserve opted to cut rates to 4.5% from 4.75%, by Thursday fears about the credit crisis dominated markets. | While stocks in the US had risen on Wednesday after the Federal Reserve opted to cut rates to 4.5% from 4.75%, by Thursday fears about the credit crisis dominated markets. |
Data released by the Commerce Department suggested that consumers had tightened their spending in September - a signal of the slowing economy. | Data released by the Commerce Department suggested that consumers had tightened their spending in September - a signal of the slowing economy. |
In addition, CIBC World Markets downgraded two leading US finance firms - Citigroup and Bank of America - sending their shares down by 6.8% and 5.4% respectively. | |
The BBC Global 30, which tracks stocks worldwide, slipped 1.55%. The Standard & Poor's 500 Index ended down 2.6% at 1,508.44 while the Nasdaq Composite Index fell 2.2% to end at 2,794.83. | |
Concern about the fallout from the sub-prime mortgage crisis was set to linger for some while yet, said Yasushi Hoshi, a strategist at Daiwa Securities. | |
"The worst (losses from credit crunch) are priced in for the July-September quarter, but the sub-prime mortgage jitters won't be completely gone in the near term," he said. |