Global Stocks Fall As Gustav Hits
By Jeremiah Marquez
Associated Press
Tuesday, September 2, 2008
HONG KONG, Sept. 1 -- Asian stock markets dropped sharply Monday, led by exporters such as Canon and LG Electronics, amid worries over slowing global demand and crude prices as Hurricane Gustav bore down on Gulf Coast oil operations.
In Europe, stocks fell more modestly. Britain's FTSE 100 index closed down 0.60 percent at 5602.80, Germany's DAX fell 0.01 percent to 6421.80 and France's CAC slipped 0.23 percent to 4472.13.
The U.S. stock market was closed yesterday for Labor Day.
In Asia, South Korean shares were hit hardest, with the Korea Composite Stock Price Index plummeting 4.1 percent to 1414.43 -- its lowest level in 17 months -- amid multiyear weakness in the country's currency.
Japan's Nikkei 225 index, meanwhile, lost 1.83 percent to 12,834.18 as investors cashed in recent gains and Friday's drop on Wall Street darkened the near-term outlook.
Taiwan's benchmark index plunged 3.3 percent, hurt by concerns about the country's electronics industry in the face of slowing world economic growth. Other stock measures in Shanghai, Hong Kong and Singapore also retreated.
Global investors were uneasy after the United States released figures Friday showing decreasing personal incomes and weak consumer spending -- suggesting softer demand for foreign goods in the world's largest economy.
Oil prices also topped concerns as Hurricane Gustav churned toward Louisiana, prompting companies to shut down drilling and refining operations in the Gulf Coast. Crude rose $2.79 to $118.25 a barrel before retreating dramatically in European trading to below $111 a barrel.
"There's not much positive news. We have slowing down in the U.S and higher oil prices. So investors are clearly still worried," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.
Across Asia, companies that depend on the United States and other export markets took a beating, with cautious comments from computer maker Dell weighing on the technology sector.
Hon Hai Precision Industry, the giant Taiwanese electronics manufacturer that supplies Apple and other leading brands, plunged 6.9 percent after posting a decline in profit.
In South Korea, Hynix Semiconductor, the world's second-largest manufacturer of computer memory chips, slid 11.3 percent. Major handset maker LG Electronics fell 9.6 percent.
South Korean airlines slumped, with Korean Air Lines declining by its daily limit of 14.95 percent. Analysts noted the won's fall is raising concerns about inflation as well as South Korea's economic fundamentals.
Japanese exporters also lost ground, with printer and digital camera maker Canon falling 2.6 percent and Toyota retreating 2.2 percent.
As in other countries, Japan's major electronics makers had a rough day, as fears of a downturn in consumer spending at the year-end holiday season spread. Sanyo Electric dropped 4.1 percent, while Sony fell 2.4 percent, though game maker Nintendo bucked the trend.
Monday's decline in Tokyo largely erased gains last week when the Nikkei broke 13,000, considered by some investors to be a key level for judging market sentiment.
"There was a feeling that the market went too far when it hit 13,000, and today was a reaction to that, especially given weaker U.S. stocks and the yen's gain" against the dollar, said Yutaka Miura, a senior strategist at Shinko Securities.
In mainland China, the Shanghai Composite Index dropped 3 percent to 2,325.14.
"Investors are disappointed over the lack of any effective moves by the government to boost the market, so sentiment is still too weak," said Zhang Jintao, an analyst at Guotai Junan Securities in Shanghai.
Airlines, whose operations are sensitive to increases in fuel prices, fell on oil jitters. China Southern Airlines dropped 5.5 percent and Air China fell 5.3 percent.
In oil issues, PetroChina fell 3 percent to its lowest level since the company listed its shares in Shanghai in October 2007. Banking shares sank despite solid earnings in the sector recently, with leading lender ICBC off 2.8 percent.
Market weakness in Asia and the United States hurt shares in Hong Kong, where the Hang Seng index lost 1.7 percent to close at 20, 906.31.
Clothing company Esprit Holdings, which relies heavily on European demand for its exports, wilted 6 percent after a series of analyst downgrades.
China Mobile, meanwhile, continued to fall amid concerns about its earnings outlook, hitting a new yearly low before closing down 2.34 percent.
Associated Press staff writer Louise Watt in London contributed to this report.
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