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Asian stocks skid as fears for US profits grow

Asian stocks skid as fears for US profits grow
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First Published: Mon, Apr 14 2008. 04 04 PM IST
Updated: Mon, Apr 14 2008. 04 04 PM IST
AFP
Hong Kong: Asian stocks tumbled Monday as concerns about US corporate earnings, low American consumer confidence and the poor global economic outlook shook investors, punishing shares in Japan and China.
Tokyo tumbled just over 3% and China slid more than 5.6% as trading screens across Asia turned red. Hong Kong fell nearly 3.5% with Australia, Taiwan, South Korea and Singapore all down too.
Investors took their cue from New York where the Dow Jones industrial average fell more than 250 points on Friday after General Electric said its profits were hit by the credit market turmoil and downgraded its outlook.
Following bellwether GE’s surprise announcement earnings are due this week from a raft of big players, including JP Morgan Chase, Merrill Lynch and Citigroup.
Investors expect bad results following the world financial crisis, which began with rising defaults among subprime, or riskier, US mortgages but now threatens losses of nearly one trillion dollars and a worsening credit crunch.
Stocks were also hit by a weaker-than-expected reading showing US consumer confidence at a 26-year low.
A Group of Seven (G7) meeting of finance leaders at the weekend provided little solace, concluding that global economic prospects had deteriorated and expressing worry at the US dollar’s slide.
Investors in China and Hong Kong were also waiting nervously for key economic numbers due from the mainland this week, including inflation and first-quarter economic growth data.
High numbers could lead the authorities to take more steps to slow the Chinese economy, a development some onlookers fear would hit local stock prices still further.
Tokyo
“Japanese share prices tumbled 3.05% after heavy losses on Wall Street sparked by disappointing earnings news and a weak consumer confidence survey,” dealers said.
They said signs of growing gloom among world finance chiefs about the economic outlook had added to pressure on the market.
The benchmark Nikkei-225 index fell 406.22 points to end at 12,917.51. The broader Topix index of all first-section shares declined 32.38 points or 2.53 % to 1,246.24.
“Concerns about US corporate earnings are increasing as companies may lower their profit forecasts and Japanese corporations may do likewise,” said Maki Shimizu, an analyst at UBS Securities.
Stocks were also hit by a weaker-than-expected reading showing US consumer confidence at a 26-year low.
“The extremely poor consumer confidence reading may add to worries about stagflation,” said Yoshikiyo Shimamine, chief economist at Dai-Ichi Life Research Institute.
“Many investors were hesitant to take new positions until numerous uncertainties (related to) US and China data and first-quarter earnings of major US banks” are cleared, said Matt McKeith of First State Investments.
Shanghai
Chinese share prices closed down 5.62 %. The benchmark Shanghai Composite Index that covers A and B shares, closed down 196.22 points at 3,296.67 on turnover of 67.0 billion yuan ($9.6 billion).
“Investors were still cautious as authorities are scheduled to release economic figures this week, and the outlook for the stock market remains uncertain,” said Zhang Qi, an analyst at Haitong Securities.
The Shanghai A-share Index slumped 5.62% to 3,459.00. The Shenzhen A-share Index lost 6.34% at 1,059.22.
The Shanghai B-share Index shed 5.87% to 236.75. The Shenzhen B-share Index lost 4.56% to 533.29.
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First Published: Mon, Apr 14 2008. 04 04 PM IST
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