Asian stocks follow Dow

From the Associated Press

The historic sell-off on Wall Street spread to Asia early today, with stocks across the region plunging after the U.S. House of Representatives rejected a rescue plan that investors had hoped would bolster volatile financial markets.

All major stock markets in the region tumbled sharply in morning trading, succumbing to heightened fears of a broader, global credit crisis.

Japan’s benchmark Nikkei 225 index shed more than 544 points, or 4.6%, to 11,199.07 after losing 1.3% on Monday.


Key indexes in Australia and New Zealand were both down about 4%, Seoul’s Kospi lost 3.5%, and Hong Kong’s Hang Seng index declined 5.5%.

The weighted price index of the Taiwan stock market, which was closed Monday because of a typhoon, fell 6.1%, even after Taiwanese Vice Premier Paul Chiu urged investors to have confidence in the island’s export-driven economy and its financial markets.

The selling in Asia came after world stock markets tumbled Monday amid a flurry of government bank rescues in Europe that had investors on edge even before the House voted to reject the Bush administration’s rescue plan.

The House rebuff of the $700-billion bailout package for the financial system shocked capital and stock markets around the world. The Dow Jones industrial average closed down more than 777 points, its biggest single-day fall.

The downturn sapped the dollar overnight. The greenback was trading at 103.90 yen this morning in Asia from above 106 yen a day earlier, adding further pressure on major exporters.

Latin American markets were still open when news that U.S. lawmakers had rejected the bailout sent investors running for the exits from Mexico City to Buenos Aires.


Stocks in Europe had earlier ended lower, though less dramatically, as market players fretted about the health of the world’s financial system, even with a U.S. bailout.

In Latin America, Brazil’s main index took the hardest hit, shedding 9.4% to end at 46,028, after falling almost 14% during the session.

Buenos Aires’ Merval index, meanwhile, dropped 8.7% to close at 1,545, while Mexico’s IPC index slipped 6.4% to close at 23,956. Chile’s Ipsa index closed down 5.5% at 2,631.

The Toronto Stock Exchange, meanwhile, closed down 840 points, or 7%, at 11,285. It had been down 955 points Monday in the initial reaction to the vote in the House.

Even before the vote in Washington, markets in Europe and Asia were bleak, as a flurry of developments around the world appeared to confirm fears that the global financial contagion was likely to spread further before any recovery.

“There’s an increasing realization that the cleanup and the mending of all that’s gone wrong is going to take an extended period to work through, and we’re going to see an extended recovery period,” said Jamie Spiteri, senior dealer at Shaw Stockbroking in Sydney.


The London Stock Exchange FTSE 100 fell 5.3% to 4,819, while Germany’s DAX dropped 4.2% to 5,807 and France’s CAC 40 fell 5% to 3,953.