Wednesday April 8, 08:39 AM
Asian markets spiral on earnings gloom
HONG KONG (AFP) - Stock markets across Asia tumbled for a second straight day as investors followed a dive on Wall Street and fears for corporate earnings further eroded confidence.
Worries about the global banking sector, bleak export data from Japan and figures showing a contraction in the Eurozone economy also helped fuel pessimism.
The earnings season got off to a miserable start with US aluminium giant Alcoa announcing a massive first quarter loss and Japan's Sharp announcing a worse-than-expected net loss for the past financial year.
Hong Kong slid more than 4.0 percent, Tokyo 2.69 percent, Sydney ended 2.34 percent off and Seoul dived almost three percent. Markets throughout the region were in negative territory.
Markets fell Tuesday on profit-taking following weeks of rallies.
It also followed a dismal trading day Tuesday in the , where the Dow Jones Industrial Average dropped 2.3 percent and the S&P 500 (news) shed 2.4 percent.
Francis Lun, general manager of Fulbright Securities, a Hong Kong brokerage, said investors in Asia were "scrambling for an exit" after the tumble on Wall Street.
"It is all the fault of the US market," Lun said, referring to comments made by billionaire hedge fund manager George Soros Tuesday that the month-long rally in the United States was a bear-market rally because the economy was still shrinking.
European stocks opened lower Wednesday, with the London FTSE 100 losing 1.33 percent, Paris's the CAC 40 (Paris: news) sliding 1.17 percent and Frankfurt's DAX down 0.83 percent.
Alcoa posted a net loss of 497 million dollars for the first quarter, with prices and demand down dramatically in the face of the global slowdown.
The higher than expected loss reflected a decline of 61 cents per share.
"Alcoa has come out with earnings and losses which are as dismal as a vacation in hell without any water and without any flame retardant," said Jon Ong of 24/7 Wall Street.
Japanese electronics giant . said Wednesday that it had suffered its first-ever loss due to the economic downturn, driven by soured investments and restructuring costs.
The group said it made a net loss of about 130 billion yen (1.3 billion dollars) in the financial year to March, based on preliminary results, worse than its earlier prediction of a 100-billion-yen shortfall.
The company reported an operating profit of nearly 184 billion yen in the previous year.
Sharp's struggles reflect the difficulties faced by . Government data showed Wednesday that the surplus in the country's current account, the broadest measure of trade in goods and services, more than halved in February from a year earlier.
The surplus dived 55.6 percent to about 1.12 trillion yen as plunging demand for Japanese goods kept Asia's biggest economy deep in recession and headed for its worst economic slump since World War II.
Worse than expected data from Europe added to the gloom Tuesday, as the Eurostat statistics agency said the Eurozone suffered a 1.6 percent contraction in the 2008 fourth quarter.
The figure was slightly worse than the 1.5 percent forecast and the bloc's third consecutive quarterly contraction.
The euro dropped sharply as worries deepened about the health of economies using the currency. The news also sparked speculation that the European Central Bank will lower interest rates again from an already record low 1.25 percent.
Fears over the financial sector also deepened after the Times of London said forecasts from the International Monetary Fund (IMF) are set to suggest toxic debts racked up by banks and insurers could reach four trillion dollars.
The IMF said in January it expected the deterioration of US-originated assets to reach 2.2 trillion dollars by the end of 2010, but it is understood to be looking at raising that to 3.1 trillion dollars in its next assessment of the global economy, due to be published later this month, the report said.
However surged in April as billions of dollars in government stimulus measures gained traction.
The Westpac-Melbourne Institute consumer sentiment index was 92.7 points in April, up 8.3 percent month-on-month and a 6.1 percent increase from a year ago.
Meanwhile, state media reported Wednesday that China's banks lent a record 1.87 trillion yuan (270 billion dollars) in March as they respond to government calls for growth-boosting measures.
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