Hong Kong: Asian shares fell on Monday, with Japan’s Nikkei briefly hitting its lowest intraday level since 1982, as investors feared fresh moves expected from central banks this week will not be enough to stave off a deep global recession.
Trading was chaotic as South Korea slashed interest rates in an emergency meeting and Australia’s central bank said it had intervened on Friday to support its tumbling currency.
The actions come in response to last week’s steep sell-off in global markets, especially in emerging economies, that set all kinds of, largely unwelcome, milestones. Yet signs of caution were evident throughout on Monday, as gold surged and regional bonds climbed on a bid to safety.
Japan’s Nikkei average saw wild swings as a stronger yen and tumbling bank shares weighed on the market amid continuing worry about the global economy.
The benchmark Nikkei index fell to its lowest level in 26 years in early trade before rebounding by late morning to a gain of about 0.5%.
Japanese lenders such as Mitsubishi UFJ Financial Group tumbled on concerns they will need to raise billions of dollars to offset hefty losses on their stock portfolios as a global equity market rout continues. MUFJ fell 11 percent.
The MSCI index of Asian stocks outside Japan also swung between gains and losses after hitting its lowest since August 2004 in early trade. The index was down 1.5%.
South Korean shares fell 1% despite an emergency rate cut by the central bank, highlighting investor scepticism that moves by policymakers to shore up economies will be enough to stave off recession and a sharp drop in corporate earnings.
South Korea’s central bank lowered its main interest rate by 75 basis points to 4.25% in the biggest single-day cut since it started adopting a benchmark interest rate in 1999.
Taiwan fell 5%, Australia 1.3% and Shanghai 2.3%. Hong Kong clawed back early losses to edge slightly higher while Singapore was closed for a holiday.
The US Federal Reserve is widely expected to cut interest rates by another 50 basis points on Wednesday in response to turmoil in financial markets and the threat of a sharp economic downturn.
The US government will release its advance report on third-quarter gross domestic product on Thursday. The GDP data could be the first negative print since the revised reading for the fourth quarter of 2007. That and a raft of other economic data this week could indicate how deep a recession the world’s largest economy may face.