Markets decline on continued subprime mortgage trouble in US
Asian markets saw substantial losses again on Wednesday after Wall Street declined on Tuesday in response to the chaos in the subprime mortgage sector. The Hang Seng index in Hong Kong dropped 2.57 percent to 18,836.93, while the Strait Times Index in Singapore fell 3.11 percent to 3,057.85. In India, the Sensex was 3.49 percent lower to close at 12,529.62. In Tokyo, the Nikkei 225 and the Topix index each dropped 2.9 percent, to 16,676.89 and 1,674.94 respectively. Both domestic and export-focused sectors were lower in Tokyo, with exporters hurt by a strengthening yen.
In Europe, the FTSE Eurofirst 300 fell 2.63 percent to 1,427.39. The CAC 40 was 2.52 percent lower to 5,296.22 in Paris, while Frankfurt’s Xetra Dax dropped 2.66 percent to 6,447.7. The Eurofirst’s close was its lowest since December 1, and it has lost 4 percent since the beginning of the year. Miners and the oil sector were lower on the session. Banks were also lower, with most losing in the range of 4 percent to 5 percent during the session. Retailers were higher, however.
London’s equities markets followed the downward trend. The FTSE 100 dropped 2.61 percent to 6,000.7, while the FTSE 250 dropped 2.81 percent, over 300 points, to 10,944.10. It was the largest one-day percentage decline for the 100 in ten months. As on the continent, banks were lower along with other financial stocks. The retail and online gaming sectors were both higher on bids rumors.
In New York, early afternoon saw the equities markets lower, but the declines were not as large as those elsewhere in the world. The Dow Jones Industrial Average had dropped 0.23 percent to 12,048.72, while the Nasdaq Composite was 0.07 percent lower to 2,348.93 and the S&P 500 had fallen 0.09 percent to 1,376.77. As with other markets, financial stocks were lower, while in technology sectors, Microsoft (NAS: MSFT) was 1.7 percent higher on the announcement that it will buy Tellme Networks, a privately held company that deals in voice-recognition technology.
Crude oil prices were lower at early afternoon in New York. Brent crude for April delivery dropped 9 cents to $60.81 per barrel, while April contracts for West Texas Intermediate crude fell 29 cents to $57.64 per barrel. New US inventories data showed that crude oil stockpiles increased last week, but that gasoline and distillates inventories were lower. Meanwhile, OPEC oil ministers, gathering to meet Thursday in Vienna, said they are happy with current oil prices and that they are not in favor of adding to current production levels
The dollar and yen both weakened on the day, while sterling was stronger. The dollar was being hurt by upheaval in the subprime mortgage sector, even though some analysts insisted that concerns about the subprime troubles carrying over into the wider markets were misplaced.