The massive US$700bn bank bailout plan failed to dispel the deepening worries about the global economy.
Asian stocks fall despite Senate bailout approval
HONG KONG // Asian stocks fell and safe haven assets such as government debt gained after the US Senate's approval of a massive bank bailout plan failed to dispel the deepening worries about the global economy. Doubts about whether the US House of Representatives will now approve the revised US$700 billion (Dh2.5 trillion) rescue plan for the financial system also weighed, after their unexpected rejection of an initial package on Monday sent global markets reeling.
However, the dollar remained better bid against other major currencies after the financial crisis this week started taking a bigger toll on European banks and worldwide growth. Investors are bracing for comments on the financial crisis from the European Central Bank, which meets later in the day amid expectations it will keep interest rates on hold. "This is clearly positive news but there's still the lower house vote, so there is little room for optimism. Even if the bill is passed, worries remain over the global economic outlook so financial markets are unlikely to stabilise," said Masamichi Adachi, a senior economist at JPMorgan Securities in Japan.
"It's a completely different world now. All the things US authorities are doing now are simply aimed at preventing a global meltdown. They might trigger a short rally in markets but won't offer a fundamental solution," he said. The MSCI index of Asia-Pacific stocks outside Japan fell 0.7 per cent, erasing a modest gain immediately before the US Senate vote, while Tokyo's Nikkei average fell 1.1 per cent.
South Korean stocks were among the biggest decliners with a 1.4 per cent fall, while other markets such as Australia, Hong Kong and Taiwan fell less than 1 per cent each. * Reuters