Singapore: Asian share markets on Wednesday tracked heavy losses on Wall Street on fears about an intensifying crisis in US mortgage lending, spooking investors nursing losses from a sharp sell-off two weeks ago.
Japanese stocks fell more than 2%, mirroring falls on Wall Street that were triggered by growing losses at subprime lending firms -- those operating at the riskier end of the mortgage market -- and weak US retail sales.
The yen held gains, after soaring to near a three-month high versus the dollar as the latest jitters prompted investors to close out trades funded by cheap loans in the Japanese currency.
“Most people are just headless and panicking and don’t know what they want to do,” said Axel Merk, portfolio manager, at Merk Hard Currency Fund in Palo Alto, California.
Share markets in Australia and Korea fell more than 1.5%, while the 10-year Japanese government bond yield slid to a two-and-a-half-month low after US Treasuries rallied on concerns the troubled subprime mortgage sector could hurt the wider economy.
“The worries about the US economy could become more serious,” said Kim Hak-kyun, an analyst at Korea Investment and Securities. “We are still not done with this correction period.”
Global markets had been showing signs of a tentative recovery from a slide that began at the end of February, when steep losses in Chinese stocks combined with worries about slowing US growth to spark a worldwide flight from riskier assets.
Oil steadied, after dropping sharply on Tuesday on concerns a flagging US economy would hit demand, and gold fell further as the wave of risk aversion spread to commodity markets.
Tokyo’s Nikkei was down 2.4% by 0100 GMT, while MSCI’s broadest index of shares elsewhere in Asia fell 1.5%.
Australia’s S&P ASX 200 and Seoul’s benchmark index both lost 1.7%. Singapore’s Straits Times opened down 2.4%.
Shares in exporters led the losses, hurt by the rising yen and worries of flagging demand in the crucial US market.
In Tokyo, Honda fell 3.1% and rival car maker Toyota slid 2.7%, while in Seoul Samsung Electronics dropped 2.5%.
The Dow Jones industrial average lost 2% on Tuesday and the Nasdaq Composite Index fell 2.2%.
Losses came after the Mortgage Bankers Association reported the proportion of mortgages in the initial stages of foreclosure rose to the highest rate on record and the chief executive of a large home lender said the subprime industry -- which caters to borrowers with weak credit -- was in a “liquidity crisis”.