Asian stocks tumbled today after heavy losses on Wall Street as fears mounted that the US president-elect Barack Obama is inheriting an economy sinking deeper into recession. Dealers said the election party had come to an end as reality dawned that Mr Obama would not take office until January, while markets were eager to see fresh economic stimulus measures as soon as possible. "Now that the event is over, investors are sobering up and looking at the economic gloom," said Masatoshi Sato, a Mizuho Investors Securities broker.
"The market is now watching what concrete economic measures his team will roll out. If it takes a long time, funds may move to sell," he warned. Tokyo's Nikkei stock index tumbled 5.7 per cent by lunch while Hong Kong share prices opened 5.1 per cent lower. Sydney was 3.3 per cent in the red by noon while the Singapore market dropped 4.1 per cent. The sharp falls came after the Dow Jones index slid 5.05 per cent on Wall Street yesterday as investors braced for a gloomy economic ride after the euphoria of Mr Obama's election victory faded.
The euro dropped to $1.2873 in Tokyo morning trade, down from $1.2962 late yesterday in New York. The dollar was at •98.26 after •98.33. Investors were anticipating further cuts to interest rates today by both the Bank of England (BoE) and the European Central Bank amid fears of recessions in Europe's biggest economies.
Some economists are even forecasting the BoE would follow up last month's emergency half-point reduction to 4.50 per cent with a cut of 100 basis points. Markets were also looking ahead to crisis talks on the global financial turmoil in Washington on Nov 15 between leaders of the Group of 20 rich countries and major developing economies. Leaders will likely agree on an "action plan" including near-term steps to help fix the global economy, a senior US official said yesterday.