Asian Markets Tank After Wall Street Drop

(CBS/AP)  Asian markets plunged Wednesday after a steep drop on Wall Street overnight fanned investors' fears the U.S. economy was sliding into a recession that would sap demand for Asian exports.

In Hong Kong, the benchmark Hang Seng index plunged 1,339.24 points, or 5.4 percent, to close the half-day session at 23,469.46. Japan's Nikkei 225 index tumbled 4.7 percent to 13,099.24.

"It's unbridled pessimism," said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. "Everyone is concentrating on a U.S. recession, but Europe is also looking bad.... We are in for a bear market now."

Investors were unnerved by economic data Tuesday showing the U.S. service sector shrank last month for the first time since March 2003. That seemed to wipe out some renewed optimism about the American economy after the U.S. Federal Reserve's two big rate cuts late last month, which gave many markets a lift.

The Institute for Supply Management reported that its December index of activity in the U.S. service sector, which accounts for about two-thirds of the economy there, dropped below 50, indicating contraction. That sent the Dow Jones industrial average plunging 2.93 percent, its largest one-day percentage drop since Feb. 27, 2007.

There's really nothing like a recession-proof job, reports CBS News correspondent Thalia Assuras, but there are options out there that provide more opportunities than others.

Global financial markets have turbulent since the start of the year, mostly tumbling amid worries about a U.S. - and worldwide - slowdown and massive losses racked up by banks that made bad bets on securities backed by risky mortgages.

Asian investors appeared increasingly anxious about a slump in Europe, another vital export market that appears to be slowing.

"There's a real probability that both the U.S. and Europe will go into recession at the same time," said Lun. "It's a financial mess on the two continents with the subprime crisis and the SocGen debacle."

The financial industry, already reeling from losses linked to the credit crisis, was dealt another blow last month when major French bank Societe Generale said it had lost about $7.1 billion in cleaning up unauthorized transactions by a rogue trader.

Elsewhere in the Asia-Pacific, Australia's key index fell 3.2 percent, while India's Sensex was down 3 percent. Thailand's market slid 1.8 percent.

Some traders said Wednesday's decline in Hong Kong was overdone and largely driven by investors keen to avoid risky exposure during the long Lunar New Year holidays.

Markets in Hong Kong and Singapore were closed Wednesday afternoon and would remain shut Thursday and Friday. Markets in China, South Korea and Taiwan were closed Wednesday through Friday for the holidays.

[noloyalisti]

We are essentially getting what we deserve. We continued to go to work even after two elections were stolen by the neo con men. With our diminishing money we kept going to Wal Mart in our larger and larger SUVs. We bought bigger houses, kept shopping and did not join in to impeach bush-cheney, etc. to stop the invasion and occupation of the middle east.

We are Americans and it is time to suffer along with the rest of the world.

[samael2014]

Contrast this with the Asian markets which were mostly built after web-based (read rapidly moving) trading and have a different character.

Posted by newsjunky5 at 12:44 PM : Feb 06, 2008

It''s actually not so much the pace of their trading that bothers me, as much as it is that they appear to be doing this with their Asian stock while just looking at the DOW. It''s already a kind of disturbing trend that they''re are a lot of short term investors out there who are moving money based on the overall mood of the market without even paying attention to market indicators that should be giving the value to your stock. When they''re doing all of this on the rapidly changing mood of a foreign market, that''s a recipe for world economic disaster that has nothing to do with the productivity/profitability of the companies underlying the markets. That is truly high-stakes gambling on a overnight global scale.

[hypnotoad72]

yongamerica - "tinfoil" is unmitigated, irrational flapdoodle. Plenty of that on some websites I''ve visted. Hence my inclusion of the term "tinfoil"; I don''t believe everything I read, and I sure don''t want to believe what I think. Malleability is the spice in life. It also leads to confusion, but nobody''s perfect... but I digress.

Caution is looking at a series of events, weighing cause/effect, looking at potential outcomes, and making the best decision from the inferences acquired.

[yongamerica]

hypnotoad72 - what''s with the tinfoil metaphors? Paranoia in your eyes is caution in another''s.

[newsjunky5]

" ..frenetically/instinctively yank the money out of their Asian investments when things look bad on the DOW and NASDAQ and could give a *** about any other market indicators in their own country..."
------------------------------------------
I think they act this way because our market dwarfs theirs by so much. Also - I''ve found that many people who cut their teeth in the market before you could trade on the web are slower to make changes to their portfolio. These are mostly older Americans who are a major financial force here (in the US) and somewhat set the tone for our behavior.
Contrast this with the Asian markets which were mostly built after web-based (read rapidly moving) trading and have a different character. Just trying to get my dad to sell, and then buy back his Washington Mutual at a later date was like pulling teeth. Old crusty retirement account owners act this way, and are more cautious to make a move. Call it old age, technophobia, guarding the nest egg, or a throwback to when making an odd-lot trade for $4 was unheard of - and may have required a visit to the broker''s office. Blame it on any of these reasons, I think it happens.

[inventagod]

Let''s count the catastrophes that have happened on the Bu$h watch...

[singingrick]

Maybe we should borrow our way to success! Oh wait, the deficit is 9 trillion dollars. Guess that''s what we''ve been doing.

[samael2014]

Asian stock investors must really be a bunch of nickel and dimers. They really seem like they''re all just a bunch of greedy short-term investors who keep eye-balling the American stock market, frenetically/instinctively yank the money out of their Asian investments when things look bad on the DOW and NASDAQ and could give a *** about any other market indicators in their own country (unless the American markets look immediately stable and their looking for another way to very quickly maximize their investments with absolutely no risk tied to anything negative happening in local Asian markets). I swear, they take non-productive blood-sucking stock profiteering to a whole new level. They''re can''t be any other rational Asian market indicator that can explain such a quick joined at the hip response to American markets which responds like sinusoidal constructive interference on top of the DOW.

[hypnotoad72]

brianbwb - the middle class is not terminally ill. Worst case tinfoil thought is that someone is injecting America''s middle class with a lethal strain of HIV.

johnstossel - gimme a break. Their markets require ours to stay afloat. Nothing can change that. After all, we''re a GLOBAL economy. ;)

The purported tax breaks for companies that offshore need to be reversed, or at least "fair trade" restored.

Or if what''s going on is planned (it''s tinfoil time, y''all), what is to replace the current structure?

[gkc99]

End of Clinton admin: no deficits, national debt falling.

End of Darth Bushit regime: national debt increased by 50%, recession underway.

Next time some Neoconscum tells you the Repug party is the party of business, laugh real loud before your spit in his or her face.