Recession fears cause Asian stock markets plunge

Asian stock markets plunged today as fears grew over the deepening world financial crisis.

Japan’s Nikkei stock index was one of the worst hit, plummeting 9.4% to close at a five-year low.

The benchmark index nose-dived 952.58 points to 9,203.32, the lowest finish since June 2003. The index has lost 24% in the last two weeks.

The dollar also briefly fell below 100 yen.

The massive sell-off in Tokyo followed a plunge on Wall Street yesterday, when the Dow Jones industrial average lost more than 5% despite steps by the Federal Reserve to reinvigorate dormant credit markets.

Australia’s stock market plummeted nearly 5% today amid anxiety about the spreading global financial crisis.

Australia’s benchmark S&P/ASX200 closed down 230.6 points, or 4.99%, to 4,388.1. The drop wiped out a 1.72% gain yesterday after the country’s central bank cut its key interest rate by one percentage point.

Ric Klusman, an institutional dealer with Aequs Securities, said the effect of the Reserve Bank of Australia’s rate cut had worn off.

“We’re not seeing any respite today; we’re actually under severe pressure,” Mr Klusman said. “The US futures are already down again in Asia, so people are very, very nervous that Europe will get belted tonight as they didn’t see a lot of the late losses in the US session, and people just think it’s going to get worse.”

Australia’s financial sector suffered early today, as the top four banks dropped just over 3% each.

The big miners also opened with big losses. BHP Billiton was down 1.55 Australian dollars, or 4.89%, to 30.15 Australian dollars, while rival Rio Tinto declined 4.70 Australian dollars, or 5.35%, to 83.07 Australian dollars.

In New Zealand, the NZX-50 index closed down 55.88 points or 1.9%, to 2,948.31, after finishing down 1.5% at 3,004.19 yesterday.

The drops come after US stocks plunged overnight on fears of a deeper credit crunch leading to severe recession.

The Dow Jones industrial average lost 508.39 points, or 5.11%, to close at 9,447.11 last night, its lowest level since September 30, 2003.

Chinese stocks also fell as investors unloaded insurers and other financial shares.

The benchmark Shanghai Composite Index lost 65.61 points, or 3%, to close at 2,090.37.

The index dipped more than 4% late in the day but regained some losses by the time the market closed.

Philippine shares tumbled for a fourth straight session with the Philippine Stock Exchange Index down 116.45 points, or 4.8%, at 2,307.74. It has lost 11.7% since last Thursday.

The weighted price index of the Taiwan Stock market lost 318.26 points to close at the session low of 5,206.40, down 5.76%.

The financial sector was the biggest loser, plunging 6.7%.

The tumble came despite media speculation that the Taiwanese government had injected large amounts of money into the market.