Recession fears haunt Asian markets

New York, Oct 27: Fears of a deep global recession dominated investor sentiment as financial markets in the Asia-Pacific region began to reopen on Monday after last week's worldwide slide in stock prices and currency collapses. There were early indications that governments and central banks will take further dramatic action to prop up the global financial system this week. The Japanese Finance Minister called a news conference for 9:00 am and the Bank of Korea announced an emergency meeting for Monday morning amid forecasts from analysts that it will announce an interest rate cut. But there is growing concern that intervention by authorities will not be enough to prevent companies from slashing production and jobs as sales get hit and financing remains difficult. Initially, financial markets were relatively stable in Asian trade on Monday. Standard & Poor's 500 December index futures opened the week slightly higher, gaining 3.0 points at 869.80 after about an hour, though the Australian dollar traded close to record lows against the yen and near 5-1/2 year lows against the US dollar. However, Japan's stock market is expected to decline, threatening to take the Nikkei average to a 26-year low. The International Monetary Fund on Sunday reached an agreement in principle with Ukraine for USD 16.5 billion loan package to ease the effects of the financial crisis. The IMF also said that it will announce a "substantial financing package" for Hungary in the next few days that will include financing by the European Union and some individual European governments. More such deals are expected as other emerging market governments turn to the IMF for help. The US Federal Reserve is widely expected to announce a 50 basis-point cut in overnight rates on Wednesday that would take them to 1 percent, the lowest level since June 2004, with some expecting an even deeper reduction to 0.75 percent. Advance third-quarter US economic growth data due on Thursday is expected to show a 0.5 percent contraction in gross domestic product after 2.8 percent growth the previous quarter. "Increasingly, the signs point to a deep and synchronized global recession," JPMorgan economist Bruce Kasman said. "It is still too early to accurately gauge the depth of the downturn, as the outlook depends on how well policy actions contain the financial crisis." A series of warnings about worse-than-expected results from major international companies last week, including Japan's consumer electronics maker Sony, French carmaker PSA Peugeot Citroen and online retailer Amazon.com, underlined the concerns that prospects are going to get a lot worse before they get better. "We are now in the midst of a full-blown global financial crisis," said Citigroup analyst Robert Buckland. "Policy-makers have been unable to calm the storm, although the increasingly aggressive response offers some hope. The earnings downturn looks to have much further to go." Bureau Report


News Source:http://www.zeenews.in/