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Asian markets hit six-month low amid fears of double-dip recession

After big falls on Wall Street yesterday there is little optimism to be found in the Asian markets this morning.

The markets make the news as they open in Asia earlier today.
The markets make the news as they open in Asia earlier today.
Image: Shizuo Kambayashi/AP/Press Association Images

ASIAN STOCK MARKETS have opened badly this morning following on from falls on the US and UK stock markets yesterday with Wall Street having its worst day in more than two years.

There are fears that the tentative global recovery is at risk amid a worsening crisis in the Eurozone and severe falls in global stock markets.

In the UK yesterday, the FTSE was down 3.5 per cent whilst in the US on Wall Street the Dow Jones was down 4.3 per cent.

A double dip recession has been mooted and analysts are warning that global markets will remain volatile for weeks to come. “Fear is the major theme,” one economist told BBC News.

Japan’s main index, the Nikkei, has fallen to its lowest level since the catastrophic March earthquake and tsunami, down 3.7 per cent.

Elsewhere in Asia and the Pacific, Korea’s main index lost 3 per cent, Australia’s dipped 3.9 per cent and Hong Kong’s shed 4.4 per cent.

Worldwide more than $4.4 trillion has been wiped out from the equity market values since 26 July, according to Bloomberg.

It comes amid a sell-off sparked by the uncertainty over the US debt crisis. Despite a deal being reached to avoid default, this appears to have done little to calm market fears.

There are also increasing concerns that Italy and Spain may be the next Eurozone countries to require international assistance.

Yesterday, the European Commission president Jose Manuel Barroso warned that the Eurozone debt crisis is spreading and urged EU governments to revisit the purpose of the European Financial Stability Fund (EFSF).

His comments came just two weeks after the terms of EFSF were amended and a second EU/IMF bailout was agreed for Greece in order to avoid further market uncertainty.

The US releases its monthly jobs report today with unemployment at 9.2 per cent and just 18,000 jobs created in the country in June.

There are predictions that only 90,000 jobs were created in July meaning unemployment will remain largely unchanged, providing little optimism for investors.

Writing in the New York Times, Floyd Norris speculates that this may be the beginnings of a double-dip recession in the US  which would, as ever, have global implications.

In the FT it is reported that more heavy losses are expected when European markets open today and that will lead to fears that another recession will not just be confined to the US, but go global.

- additional reporting from AP

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Hugh O'Connell

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