HONG KONG: Asian markets fell today hursday on lingering eurozone debt fears and following losses on Wall Street as the Federal Reserve warned that the US economy was still weak.
As traders nervously awaited a weekend summit of European Union leaders, there were concerns that a plan to deal with the region’s crisis would not be far-reaching enough.
Tokyo closed 1.03%, or 90.39 points, lower at 8,682.15, Sydney fell 1.63%, or 68.8 points, to 4,144.9 and Seoul closed 2.74% down, or 50.83 points, at 1,805.09.
Hong Kong closed 1.78%, or 326.12 points, down at 17,983.10 and Shanghai lost 1.94%, or46.14 points, to 2,331.37.
Many investors have stayed away from the markets, unsure about the future of the eurozone due to what they consider weak leadership.
An announcement last week from France and Germany that they had a plan to address the debt problem sent global shares soaring but traders have become cautious as details have been lacking and EU officials have given conflicting messages.
A report by Britain’s The Guardian newspaper saying France and Germany had agreed to more than quadruple the European Financial Stability Facility sent shares higher yesterday.
But by the end of the day doubts set in as reports emerged that the EFSF was still being discussed.
Adding to weak sentiment was news that officials have decided against plans to convert the rescue fund into a bond insurer.
“Generally markets are still pretty nervous about Europe,” said CBA Institutional Equities head of sales Justin Rooney in Sydney.
And Auckland-based HiFX senior trader Stuart Ive warned: “Ultimately, I think the market is going to end up being pretty disappointed with whatever they put together” at the summit.
“They will come through with something but it’s not going to be what the market is looking for. It certainly won’t be a solution to the whole thing and we will get risk aversion coming back,” he told Dow Jones Newswires.
Adding to downside pressure was the Fed’s “Beige Book” September report on the world’s biggest economy, which said while there was still growth in all areas, “many districts described the pace of growth as ‘modest’ or ‘slight’,”.
It said business contacts “generally noted weaker or less certain outlooks for business conditions.”
Wall Street reacted by closing in the red.
The Dow lost 0.63%, the S&P 500 shed 1.26% and the tech-heavy Nasdaq dived 2.01%.
On currency markets in Europe the euro bought US$1.3719, down from US$1.3755 late yesterday in New York while it sat at 105.22 yen from 105.65.
The dollar changed hands at 76.70 yen, from 76.82 yen in New York.
Oil was lower. New York’s main contract, West Texas Intermediate for delivery in November, was down 16 US cents at US$85.95 a barrel. Brent North Sea crude for December was down eight US cents at US$108.31.
