Hong Kong: Asian stock markets retreated Monday, with Hong Kong’s benchmark off nearly 3%, as a jump in U.S. unemployment heightened concerns the global economy is facing a prolonged slump. European markets were slightly lower in early trade.
Investors were rattled by a much-anticipated report released Friday that showed the unemployment rate in the world’s largest economy increased to a worse-than-expected 7.2% in December from 6.8% in November. Meanwhile, employers cut 524,000 jobs, bringing job losses for all of 2008 to 2.6 million the most since 1945.
While hardly surprising, the figures were still more evidence that the magnitude and duration of the global recession could be worse than many anticipated. For Asia, the news was especially unsettling as rising unemployment hurts consumer spending and erodes demand for the region’s exports.
“After the grim reminder of the U.S. labor market, I think there’s the realization that it’s not going to be an easy ride,” said Song Seng Wun, head of research at CIMB-GK in Singapore. “Investors fear the global economy might be tanking worse than even pessimists expect.”
As trading opened in Europe, Britain’s FTSE 100 was down 0.1%, Germany’s DAX declined 0.3% and France’s CAC-40 was off 0.2%.
In Asia, Hong Kong’s Hang Seng Index fell for a fifth straight session, closing down 406.44 points, or 2.8%, at 13,971. Japan’s market was closed for a national holiday.
South Korea’s Kospi dropped 24.21 points, or 2.1%, to 1,156.75, dragged down by Hyundai Motor Co. after the country’s largest carmaker said it would cut production between 25% and 30% at its domestic plants. The company’s shares sank 3%.
In India, Mumbai’s Sensex benchmark lost 3% but shares of embattled outsourcing giant Satyam Computer Services Ltd. rebounded 40% after Indian authorities Sunday named three business leaders to its board to help turn around the firm.
Australia’s key stock measure shed 1.4%, with heavy selling in Rio Tinto PLC, the world’s second-largest iron ore producer, after it postponed a $2.15 billion expansion of its iron ore mine in Brazil, citing the financial crisis. Rio’s stock finished down 6%.
Shanghai’s main index pared losses to be down just 0.2% as Premier Wen Jiabao offered reassurances that efforts to break out of an economic slump were starting to show results, with the economy performing better than expected in December.
China’s December trade figures are due to be released Tuesday, and analysts expect more weakness amid lackluster global demand. China’s exports fell in November for the first time in seven years and manufacturing activity shrank in December for a third straight month.
Elsewhere, Singapore and Taiwan markets followed the region’s downward trend.
U.S. investors, also unnerved by the jobs report, sent stocks veering lower Friday.
The Dow Jones industrial average fell 143.28, or 1.6%, to 8,599.18, logging a 4.8% decline for the week, its biggest point and percentage loss since the week ended Nov. 21. Broader stock indicators also declined, with the Standard & Poor’s 500 index falling 19.38, or 2.1%, to 890.35.
U.S. futures were lower, signaling a weak open on Wall Street. Dow futures fell 8 points, or 0.1%, to 8,515 and S&P500 futures slipped 1.1 points, or 0.1%, to 884.40.
Oil prices edged lower, with light, sweet crude for February delivery down $1.49 cents at $39.34 a barrel in Asian trade.
In currencies, the dollar slipped to 90.07 yen, down from 90.39, and the euro weakened to $1.3367 from $1.3470.