Asian, European Markets Continue Slide

Uncertainty Over U.S. Economy Prompts More Drops; China's Benchmark Index Falls 7.2 Percent

(CBS/AP)  Global market turmoil continued into a second week as Asian markets tumbled Monday in the wake of Wall Street's sell-off Friday amid persistent worries about a possible U.S. - and worldwide - economic slowdown.

It was especially dire in Shanghai: China's benchmark index plummeted 7.2 percent to its lowest point in six months on concerns that a recession in the U.S. would mean less demand for Chinese-made products.

Chinese businesses are worried that they will be selling fewer exports, the engine behind its growing economy, says CBS News correspondent Barry Peterson.

European markets also fell in early trading, and U.S. stock index futures were down, suggesting that Wall Street was poised to drop again when markets opened.

Investors around the world have been jittery for weeks about a U.S. slump, which would likely weaken demand for exports and drag on global growth. There is also concern about a worldwide credit crunch triggered by rising defaults in risky U.S. mortgages, which has led to mountains of bad assets at major American and European banks.

"There's a lot of uncertainty out there: uncertainty over the U.S. economy, uncertainty over China's economy," said Rob Hart, an analyst with Morgan Stanley in Hong Kong.

"People are also worried about contagion in Europe. If the U.S slows down, will it trigger a slowdown in Europe?" he said.

In Europe, the U.K.'s FTSE dipped 1 percent to 5,807.9 in morning trading. Germany's DAX slipped 1.2 percent while France's declined 1.7 percent.

In Asia, Tokyo's benchmark Nikkei 225 index fell nearly 4 percent to close at 13,087.91, erasing its jump on Friday, while Hong Kong's Hang Seng index sank 4.3 percent.

Declines were more modest in India, where the Sensex index - which plunged 4 percent in the first 10 minutes of trading - was down just 1.1 percent in late afternoon trading.

The sharpest declines came in China, where the Shanghai Composite index plunged 342.39 points to 4,419.29 amid worries about weaker demand from American consumers. Concerns over the potential impact of a prolonged bout of severe winter weather also took a toll.

"Investors, especially institutional investors, are very cautious," said Chen Huiqin, an analyst at Nanjing-based Huatai Securities. She said investors were waiting for possible "market rescuing" signals from the Chinese government.

"That could have a strong impact on the market," Chen said.

Global markets dropped sharply early last week on worries about slower U.S. growth. They rebounded after a hefty three-quarters cut in U.S. interest rates by the Federal Reserve last Tuesday, as well as on news of a stimulus package that Washington is hammering out.

But investors in Asia and Europe dumped shares again Monday after Wall Street sank Friday, when the Dow Jones industrials slid 1.38 percent and the technology-heavy Nasdaq composite index declined 1.47 percent.

Some traders said Asian markets dropped on concern that the Fed may not slash interest rates again - or as much as expected - when its policy planners meet Tuesday and Wednesday.

"The possibility for a 50 basis points cut is looking less likely," said Castor Pang, a strategist at Sun Hung Kai Financial in Hong Kong, pointing to future prices in New York.

Dow futures were down 80 points, or 0.65 percent, to 12,156, while Nasdaq futures were down 16.5 points, or 0.92 percent, to 1,777.

Japan's economy - heavily dependent on exports - may already be contracting, said Tetsufumi Yamakawa, chief economist at Goldman Sachs Japan.

He pointed out that five of the 11 components of Japan's business condition diffusion index have already hit highs and begun to deteriorate. Declines in six of the 11 components often indicates a recession is coming.

"A recession, which was nothing more than a risk scenario six months ago, is now turning into our main scenario," Yamakawa said in a report released Friday.

Japanese traders also were cautious ahead of a slew of corporate quarterly earnings this week, including Honda Motor Co. on Wednesday and Sony Corp. on Thursday.

[huanaco]

GENTLEMEN ALL : I KNEW IT WHEN I POSTED MY COMMENT LAST WEEK. THE PROBLEM WAS TOO LARGE TO BE FIXED WITH THE INTEREST RATE LOWERED. TONIGHT MR. BOZO, AKA MR BUSH WILL GIVE ANOTHER BRILLIANT SOLUTION. IMPEACH THIS GOOD FOR NOTHING EMPEROR.

[nothappyatall]

Gee, and didnt last week they tell us everything was turning around on the news of the humongous 3/4 of one percent cut???

"on concerns that a recession in the U.S. would mean less demand for Chinese-made products. "

WAIT!! there is light at the end of the ***** tunnel, when king george cuts everyone a $600 check and everyone blows it all on the necessities he mentioned like big screen TVs, when people buy anything now most of it is made in CHINA.
China is the loan originator for the $150 billion and then will get most of that back when everyone flocks to Wal-Mart and other stores and buys stuff- mostly made in China.
Its a win-win for Wal-mart where the poor people shop, and China! Say no more king george, just cut me my $600 check, I know where its going, and I can tell ya it aint going to Wal-mart, China, or to buy goods.

[omega39-2009]

The US consumer''s job has been sent overseas. The US consumer now works for a temporary agency. the US consumer''s job security is gone, he/she can not make a 5 year commitment to buy a new car let alone a 30yr commitment to buy a house. The foreign markets seem to have grasped this, the clowns on wall street haven''t.

[fettkonserv]

The US consumer''''s job has been sent overseas. The US consumer now works for a temporary agency. the US consumer''''s job security is gone, he/she can not make a 5 year commitment to buy a new car let alone a 30yr commitment to buy a house. The foreign markets seem to have grasped this, the clowns on wall street haven''''t.

Posted by omega39 at 08:57 AM : Jan 28, 2008

What part of the country are you in?

I agree with your comment. Even the Temporary Services in Lexington NC do not have jobs to send people to. Lexington was a major furniture manufacturing town.

[mcv57]

Hmmmmmmm .. . you think this stock market is reacting to a chaotic and corrupt government, or the pure unadulterated monopoly in the world. Hmmmmmm . . . both? IMF is going to find themselves absolutely useless on the months.

[omega39-2009]

Posted by fettkonserv at 09:03

fettkonserv, I live in CA and the same thing is happening here.

[mcv57]

With the France finance scandel (70 Billion Fraud), Asian and the Euro will be smart to pull their money yesterday.

American comrades, go to your welfare office and sign-up for food stamps. Perhaps a run on stamps will help statistics get more realistic on unemployment situation.

[mcv57]

fettkonserv, I live in CA and the same thing is happening here.

Posted by omega39

Your folks aren''t saying anything new. Read:
"The Crash of the Millenium", by Ravi Batra, PhD. Public library is still free.

[mcv57]

... looking in my crystal ball ... I see 11,742 to close ..... only because Wall Street automatically shut-down after 500 points.

[lochlan-2009]

huanaco - Yup that''s right. We all knew that the large interest rate cut is more trickle down economics. All it does is give companies more ability to whether the storm, and banks more profit on the Fed. The real problem hasn''t been addressed, and that is the 300 million Americans who at best have been dipping into their savings for the last half a decade, at worst have been watching themselves fall farther and farther behind until the collectors come, as each bill to bill goes higher and higher on the same wages and a dollar that''s value has shrunk by half. This market has a value 60% of what it did in 2000 on the value of the dollar alone. The $800-$1600 wont even pay the gas bill for the car on the majority of Americans, and on top of that, they needed that cash yesterday. They''re not going to see it until the third quarter of this year. Yet, four months ago the media are all out sounding the trumpets that the market hit 14,000. The markets are fixed. Unless you know which way the string pullers on top are going to stear the cattle, you would be best off keeping your money in fixed rate investments.

Another note is the only way to cash out on a bubble is to crash the market and clean out all the petty investors. The Asian markets have been through the ceiling for profits. Might be time to pull the carpet out from under them.

[king77shaw]

INVEST IN YOURSELF !

1) CANCEL YOUR CABLE / SATTELITE TV: let the corporate media moguls (and their advertisers) know that you will no longer pay for their propaganda.

2) STOP INVESTING YOUR MONEY ON WALL ("WAR") STREET: corporate America is selling out the middle class to the lowest global bidder and using our own money to do it; the financial markets will push for anything that increases profits - especially war .. invest your money in land, real estate, gold and silver.

3) SUPPORT LOCAL ECONOMIES !
- Buy from local manufacturers, local retailers, local craftspeople/artisans, etc.
- if possible, BURN WOOD for heat;
- support local growers or grow some of your own food;
- implement alternative energy sources (solar, hybrid autos etc ..)
- develop local means of commerce not based on the failing US dollar.

4) AFFORDABLE HEALTH CARE BEGINS WITH YOU - healthy eating habits and exercise will create less demand on the system meaning lower costs. You%u2019ll have plenty of time to work out once you UNPLUG THE TV DRUG. Avoid eating processed foods, fast foods and anything with high fructose corn syrup.

5) STOP UNNECESSARY CONSUMPTION & STOP USING YOUR CREDIT CARD !

6) DECENTRALIZE ! - the global economy is nothing more than a ploy to centralize power, control and wealth into the hands of an elite few - blinded by misinformation, the American people are buying right into it - the rich get richer and the middle class is quickly becoming the working poor.

[ajaxtheleast]

If Mister Bush''s "mostly to show that he''s still

relevant" State of the Union Address doesn''t work

tell him to try a State of the World address.