Sailors sweep elevator 4 aboard the the USS Harry S. Truman after replenishment at sea, Jan 15, 2008. U.S. Navy photo by Seaman Apprentice Matthew Bookwalter.
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Stock markets in Asia slump, dollar hits new low against Yen
By: VOA News | Submitted on: 03/17/08HONG KONG (VOA) - Hong Kong's Hang Seng Index fell more than five percent in Monday trading, and Tokyo's Nikkei Index plummeted nearly four percent to a near two-year low. Other Asian stocks markets also closed lower.
Peter Morgan is the chief Asian economist with the international bank HSBC in Hong Kong. He says share prices took a beating after brokerage JP Morgan Chase bought rival Bear Stearns for $2 a share.
"It perhaps exacerbated concerns that there may be more other weak companies out there, so I think that was the main reason for the weakness," he said.
Bear Stearns is one of several international investment banks that have been hard hit by what is known as the sub-prime mortgage crisis. Sub-prime mortgage loans were made to home buyers in the United States with poor credit records. Many of those buyers are now unable to pay their mortgages, as the once hot U.S. real estate market has slowed dramatically.
Morgan says stocks also fell in response to fears that China may be raising its interest rate to deal with rising inflation.
Late Sunday in the United States, the Federal Reserve unexpectedly lowered the interest rate it charges on direct loans to banks and took steps to provide extra cash to the banking system.
The moves are meant to relieve pressure on the struggling global banking system and the weak U.S. economy. But it did not stop the dollar from falling below 96 yen, its lowest since 1995. The dollar also fell to new lows against the euro and Swiss franc.
Analyst Morgan says that it is difficult to anticipate when the dollar will regain strength.
"[The] Basic point is that the Fed is still easing policy [cutting interest rates] and until we get some indication that the Fed has stopped cutting rates then I think the dollar is going to be under pressure," said Morgan.
Oil soared to new highs near $112 a barrel in Asian trading. Analyst Morgan says the falling dollar is to blame for that spike, because it is sparking a rush of funds into commodities that are seen as financial safe-havens. Also, since oil is priced in dollars, a weak dollar means oil exporters earn less.
"Investors are shifting into anything which they perceive as anything as store value against the dollar," said Morgan. "And oil is one thing, commodity prices more generally, certainly gold has also been a source of demand by investors."
Gold jumped to a new high of $1,032.35 - up more than $30 from Friday.
Peter Morgan is the chief Asian economist with the international bank HSBC in Hong Kong. He says share prices took a beating after brokerage JP Morgan Chase bought rival Bear Stearns for $2 a share.
"It perhaps exacerbated concerns that there may be more other weak companies out there, so I think that was the main reason for the weakness," he said.
Bear Stearns is one of several international investment banks that have been hard hit by what is known as the sub-prime mortgage crisis. Sub-prime mortgage loans were made to home buyers in the United States with poor credit records. Many of those buyers are now unable to pay their mortgages, as the once hot U.S. real estate market has slowed dramatically.
Morgan says stocks also fell in response to fears that China may be raising its interest rate to deal with rising inflation.
Late Sunday in the United States, the Federal Reserve unexpectedly lowered the interest rate it charges on direct loans to banks and took steps to provide extra cash to the banking system.
The moves are meant to relieve pressure on the struggling global banking system and the weak U.S. economy. But it did not stop the dollar from falling below 96 yen, its lowest since 1995. The dollar also fell to new lows against the euro and Swiss franc.
Analyst Morgan says that it is difficult to anticipate when the dollar will regain strength.
"[The] Basic point is that the Fed is still easing policy [cutting interest rates] and until we get some indication that the Fed has stopped cutting rates then I think the dollar is going to be under pressure," said Morgan.
Oil soared to new highs near $112 a barrel in Asian trading. Analyst Morgan says the falling dollar is to blame for that spike, because it is sparking a rush of funds into commodities that are seen as financial safe-havens. Also, since oil is priced in dollars, a weak dollar means oil exporters earn less.
"Investors are shifting into anything which they perceive as anything as store value against the dollar," said Morgan. "And oil is one thing, commodity prices more generally, certainly gold has also been a source of demand by investors."
Gold jumped to a new high of $1,032.35 - up more than $30 from Friday.
The Voice of America (VOA), which first went on the air in 1942, is a multimedia international broadcasting service that reaches a worldwide audience of more than 115 million people.
