Global markets tumble again on recession fears
Pastor Dale Morgan
Global markets tumble again on recession fears*
* Justin McCurry in Tokyo and Graeme Wearden
* guardian.co.uk,
* Monday January 28 2008
Growing fears of a global recession sent stock markets in Europe and
Asia tumbling again this morning, with poor results from Japanese
companies adding to the mounting concerns.
Japan's Nikkei stock index lost almost 4% today, dropping 541.2 points
to close at 13,087, ending the modest recovery that followed dramatic
losses on the world's major stock markets at the beginning of last week.
In London, the FTSE fell by 1.5% when it opened, dropping 88.4 points to
5,780.6.
Manus Cranny of Cantor Index said the City was in a nervous mood after
last week's turbulence.
"Today is all about confidence," he said, warning that banks and
housebuilders could experience a tough time today.
Barclays and Royal Bank of Scotland both lost 3% in early trading, while
Barratt Developments fell nearly 4%.
Tokyo had momentarily been buoyed by last week's cut in interest rates
by the US Federal Reserve, but a drop on Wall Street on Friday
reawakened caution among Japanese investors. Today's losses all but
cancelled out the 4.1% gain made in Tokyo on Friday.
The plunge came amid warnings that Japan had already entered a recession
or would do so in the first half of this year.
Tetsufumi Yamakawa, chief economist at Goldman Sachs Japan, said five of
11 main business performance indicators had deteriorated. If the number
of failing components reaches six, it indicates a recession.
"A recession, which was nothing more than a risk scenario six months
ago, is now turning into our main scenario," due to a slowdown in
exports to and stagnation in the domestic housing market, Yamakawa said.
Among the biggest losers were Nippon Steel, the world's second-biggest
steel maker, which lost 7.7%. The firm said its pre-tax profit for the
nine months to December had fallen 0.7%
The strengthening yen put further pressure on Japanese exporters, with
Toyota falling 4.1%, Canon 4.9% and Sony 4.5%.
Traders were cautious ahead of what many expect will be poor earnings
results by several big Japanese firms later this week.