The Washington Post

Asian markets stabilize after steep early losses Tuesday

Asian markets opened Tuesday morning with major losses in the early minutes, extending fears of a global economic downturn, but stabilized by the end of trading.

Japan’s Nikkei-225 index dropped 4.15 percent in the first 50 minutes of trading, losing 377 points to fall below the 9,000 mark for the first time since mid-March, the aftermath of a major earthquake and tsunami. The slide continued throughout the morning session.

By the end of the day, the Nikkei pulled back to a fall of 1.7 percent.

South Korea’s Kospi was off 3.6 percent at 1,801.35 after plummeting nearly 10 percent in the morning. Hong Kong’s Hang Seng, which fell as much as 7 percent, was down 2.9 percent at 19,890.85.

Australia’s S&P/ASX 200 index moved into positive territory — up 1.2 percent at 4,034.80 — and mainland China’s key indexes eked out modest gains, according to the Associated Press.

The massive sell-offs of the morning occurred in the aftermath of Wall Street’s worst trading day since the 2008 crisis — a reaction to the Friday credit-rating downgrade from ratings agency Standard & Poor’s.

Asian markets were down between 2 and 4 percent Monday, the first day of trading following the news, but Tuesday morning took a more significant toll. Analysts described a fear spreading through the markets, as traders rushed toward safe-haven investments.

Since Wednesday, the Nikkei has fallen more than 11 percent, dropping at least 2 percent in four of five days. The only day of slight growth came Thursday, when Japan’s Finance Ministry intervened in the foreign currency market, briefly weakening the yen against the dollar in an attempt to help its export-dependent economy.

Shortly after the opening Tuesday, the effects of the intervention had already withered, with the yen trading in the low-77 range against the dollar, which was roughly its value before the intervention. During times of economic turmoil, the yen tends to appreciate, as investors see it as a safe haven.

On Tuesday, Japan’s finance minister, Yoshihiko Noda, said he will watch the markets “with a sense of alarm.” Noda has been pegged by political analysts, and by supporters, as a likely successor to Prime Minister Naoto Kan.

Chico Harlan covers personal economics as part of The Post's financial team.


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