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Asia stocks trampled, Japan crashes on panic & Oil plummets to $82 on global slowdown fears & Sources: US nears removing NKorea from terror list
Asia stocks trampled, Japan crashes on panic
By Kevin Plumberg
31 minutes ago
Asian stocks plunged on Friday, with Japan's Nikkei down 24 percent in the week, while the U.S. dollar rose to a 14-month high against a group of major currencies, on panic that global efforts so far have failed to stop financial chaos from spreading.
European shares opened 4 percent lower with waves of negative sentiment crashing overseas. U.S. stock futures were down 3 percent, pointing to a steeply lower open on Wall Street.
A synchronized cut in borrowing costs by central banks around the world this week was seen as too little, too late, and investors doubted a meeting of the Group of Seven rich nations later on Friday could achieve much, with fears growing that the global economy is headed toward recession.
U.S. government debt and the yen have become shelters from the worsening financial crisis that overnight knocked the U.S. S&P 500 stocks index down 7.6 percent to a 5-year low. But cash was ultimately king, with even Japanese government bonds being liquidated for funding.
Fears of a sharp slowdown in demand for raw materials from heavy consumers like China and the United States dragged oil prices down to a 12-month low below $83 a barrel.
"It's impossible to predict the bottom, and technical analysis is meaningless as panic and fear overwhelm the markets," said Jang Huh, managing director at Prudential Asset Management in Seoul.
The Nikkei share average finished down 9.6 percent, bringing the week's losses to 24 percent, more than twice what it lost during the week of the 1987 stocks market crash.
Japan has a market holiday on Monday, so investors did not want to be caught unprepared.
Unlisted Yamato Life Insurance Co filed for bankruptcy protection because of market turmoil, shocking investors who had thought Asia's financial sector, especially Japan's, was relatively stable compared with Europe and the United States.
The MSCI index of Asia-Pacific stocks excluding Japan was down 7 percent to its lowest in almost four years and has fallen 20 percent this week alone. The all-country world stocks index fell to the lowest since November 2003.
Hong Kong's Hang Seng index dropped 8 percent to a near three-year low. The market value of companies listed on the index has lost almost half its value since the year began.
South Korea's KOSPI ended 4.1 percent lower, managing to cut some of its losses after the heads of local brokerages met to propose a market stabilization fund.
The Chicago Board Options Exchange Volatility index (VIX), seen as a gauge of investor fear, on Thursday hit an all-time high of 64.92, as investors scrambled to buy increasingly expensive protection against erratic price action.
Global equity markets have declined with brutal swiftness, sending investors to U.S. Treasury debt despite weakness in recent days on expectations for a glut of new issuance.
The 10-year note rose 5/32 in price, taking its yield to 3.75 percent from 3.78 percent. Rates on one-month T-bills fell to just 0.066 percent, from 0.080 on Thursday and 1.55 percent as recently as September 11, as the very short end of the market continued to act as a source of funding with other avenues all but shut down.
WHAT MORE CAN BE DONE?
Credit markets were nearly broken. The cost of protection against defaults in Asia's sovereign and corporate debt soared to record highs, traders said.
The iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion for the region's "junk"-rated credit, soared about 90 basis points to a record 890/940 bps, a Singapore-based fund manager said. But traders warned of little activity in the credit markets, which tends to magnify price differences.
Extreme market volatility stoked talk that the major central banks would have to reduce interest rates again, just days after a concerted round of cuts led by the Federal Reserve and European Central Bank. There were also reports the U.S. Treasury was under intense pressure to inject funds directly into commercial banks.
"It highlights the enormity of the issue and the problem faced by the G7," said Adam Carr, a senior economist at broker ICAP in Sydney. "Given the muted response in markets, certainly I think more rate cuts are to come, as ineffective as they are proving. Lets hope the G7 propose a good dose of fiscal medicine to the real economy as well."
Whether or not global policymakers have anything more planned, time was running thin.
The spread of 3-month London interbank offered rates over the 3-month U.S. Treasury bill yield widened to 426 bps, increasing more than 300 bps in the last month, with cash being hoarded and practically no lending between banks.
Japanese government bond futures dropped 1.1 points to 137.35, with investors in a frantic rush to secure cash with domestic money markets succumbing to the freeze around the world.
The euro slid to a three-year low of 132.80 yen before trimming losses to 133.70 yen. The U.S. dollar hit a six-month low of 97.91 yen before clawing back to 98.70 yen.
The Intercontinental Exchange's U.S. dollar index, which measures the dollar's value against a basket of major currencies, climbed 0.6 percent to 81.939, the highest since August 2007.
U.S. crude oil futures fell 4.9 percent to $82.33 after earlier hitting a 12-month low of $82 a barrel on concerns the growing financial crisis would sap fuel demand from countries like China.
The slowdown in the country's property and manufacturing sectors means it will take time to work through its metals and other raw materials stockpiles.
"With a steady stream of negative news dampening sentiment across the commodities complex, market players are hoping for supportive government measures to arrest the decline in commodity and equity prices," said Jing Ulrich, managing director and chairman of China equities with JPMorgan in Hong Kong.
Spot gold was relatively unchanged at $911 an ounce, though it gained 9.1 percent in the week.
(Additional reporting by Park Jung-youn in SEOUL, Wayne Cole in SYDNEY and Rafael Nam and Umesh Desai in HONG KONG, editing by Dhara Ranasinghe)
Oil plummets to $82 on global slowdown fears
Friday October 10, 2:53 am ET
By Alex Kennedy, Associated Press Writer
Oil plummets to 1-year low of $82 in Asia on fears global slowdown will cut crude demand
SINGAPORE (AP) -- Oil prices plummeted to a one-year low below $83 a barrel Friday in Asia as investor fears of a severe global economic downturn sparked a panicked sell-off of equities and crude.
Light, sweet crude for November delivery was down $4.35 to $82.24 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore, the lowest since October 2007. The contract overnight fell $1.81 to settle at $86.62.
"The whole market has lost confidence in everything," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "Everyone is worried about global growth, and oil is the front line commodity for that. There's just a lot of panic and fear in the market."
Investors have been unimpressed by interest rate cuts by the U.S. and other leading central banks this week to help unclog the credit markets and promote lending. A credit crisis that began last year in U.S. sub-prime mortgages has spread across the globe, forcing governments to spend hundreds of billions of dollars to bail out banks, brokerages and insurance companies.
Japan's benchmark Nikkei 225 index plunged more than 10 percent Friday while the Dow Jones industrial average fell more than 7 percent Thursday to its lowest level in five years.
"The problem is no one really knows how far and deep this will go," Pervan said. "But we can see from the size of the rescue packages, this is a really serious deal. This isn't a normal bear market."
Oil investors even ignored signs that the Organization of Petroleum Exporting Countries may cut production. OPEC said Thursday it will hold an extraordinary meeting Nov. 18 to discuss how the widening global financial crisis is affecting oil prices.
On Thursday, the head of Libya's national oil company, Shukri Ghanem, called on oil producing nations to cut output.
"OPEC is trying to jaw-bone the price up, but they'll have to come into the market because no one is going to be believe just jaw-boning with the market sliding so quickly," Pervan said. "The market is so demand focused, it doesn't even care what happens to supply."
OPEC's decision last month to cut production by 520,000 barrels a day failed to halt the losses, which have accelerated in recent days.
Oil prices have fallen about 44 percent since soaring to a record $147.27 on July 11.
"We haven't seen the bottom of this yet," Pervan said. "We thought $75 would be a floor but if the market mood doesn't change, $50 to $60 a barrel is not out of the question."
In other Nymex trading, heating oil futures fell 9.46 cents to $2.32 a gallon, while gasoline prices dropped 8.68 cents to $1.94 a gallon. Natural gas for November delivery rose 6.69 cents to $6.69 per 1,000 cubic feet.
In London, November Brent crude fell $3.66 to $79.00 a barrel on the ICE Futures exchange.
Sources: US nears removing NKorea from terror list
By MATTHEW LEE, Associated Press Writer
43 minutes ago
The Bush administration is nearing a decision to remove North Korea from a terrorism blacklist and may do so as early as Friday in a bid to salvage faltering nuclear disarmament talks, The Associated Press has learned.
U.S. officials said Thursday that no final decision had been made but diplomats briefed on the matter told the AP that they believe an announcement that North Korea will be tentatively taken off the State Department's list of state sponsors of terrorism is imminent.
The delisting depends on North Korea agreeing to a plan to verify an account of its nuclear activity that it submitted over the summer, the diplomats said. North Korea would be put back on the list if it doesn't comply with the plan and abandon nuclear arms, they said.
The diplomats spoke on condition of anonymity ahead of an expected announcement, which would follow meetings last week in Pyongyang between North Korean officials and U.S. envoy Christopher Hill as well as days of intense debate in Washington.
The move would be a last-ditch attempt to save a disarmament agreement that has frayed badly in recent months as North Korea moves to restart its main nuclear plant and takes other provocative steps such as expelling U.N. inspectors and launching short-range missiles.
Saving the deal and getting Pyongyang to follow through would also be a major foreign policy success for the administration in its waning months.
But opponents of the deal, mainly conservative hawks in and out of the administration, say removing the North from the terrorism list now would be a reward for bad behavior from a country that cannot be trusted.
North Korea had disabled its Yongbyon nuclear facility under the initial phases of the deal but since August has been reversing that because the United States has not removed it from the terror list as it agreed after North Korea provided a declaration of its atomic program in June.
The U.S. has said it will fulfill the obligation only when North Korea accepts a plan to verify that accounting.
But while he was in North Korea, Hill proposed a face-saving compromise under which the North would be provisionally removed from the terrorism list as soon as it deposits with China an agreement on verification, according to U.S. officials.
China, the chair of the six-nation nation negotiations, would then announce that the North Koreans were on board, allowing Pyongyang to claim that Washington moved first, they said.
Despite signs the delisting is close, details of what North Korea is prepared to allow in terms of inspections of its nuclear sites are unclear. The specifics of Hill's discussions with the North are closely held in Washington among a tight circle of top Bush aides, officials said.
White House press secretary Dana Perino said agreement on a "verification protocol" remained the key to taking North Korea off the list. "If we can get a verification protocol that we are satisfied with, then we would be able to fulfill our side of the bargain," she said.
Later, amid a swirl of speculation in Washington, Seoul and Tokyo that the delisting would come on Friday, National Security Council spokesman Gordon Johndroe would say only that "no final decision has been made yet."
___
Associated Press writer Deb Riechmann contributed to this report.
By Kevin Plumberg
31 minutes ago
Asian stocks plunged on Friday, with Japan's Nikkei down 24 percent in the week, while the U.S. dollar rose to a 14-month high against a group of major currencies, on panic that global efforts so far have failed to stop financial chaos from spreading.
European shares opened 4 percent lower with waves of negative sentiment crashing overseas. U.S. stock futures were down 3 percent, pointing to a steeply lower open on Wall Street.
A synchronized cut in borrowing costs by central banks around the world this week was seen as too little, too late, and investors doubted a meeting of the Group of Seven rich nations later on Friday could achieve much, with fears growing that the global economy is headed toward recession.
U.S. government debt and the yen have become shelters from the worsening financial crisis that overnight knocked the U.S. S&P 500 stocks index down 7.6 percent to a 5-year low. But cash was ultimately king, with even Japanese government bonds being liquidated for funding.
Fears of a sharp slowdown in demand for raw materials from heavy consumers like China and the United States dragged oil prices down to a 12-month low below $83 a barrel.
"It's impossible to predict the bottom, and technical analysis is meaningless as panic and fear overwhelm the markets," said Jang Huh, managing director at Prudential Asset Management in Seoul.
The Nikkei share average finished down 9.6 percent, bringing the week's losses to 24 percent, more than twice what it lost during the week of the 1987 stocks market crash.
Japan has a market holiday on Monday, so investors did not want to be caught unprepared.
Unlisted Yamato Life Insurance Co filed for bankruptcy protection because of market turmoil, shocking investors who had thought Asia's financial sector, especially Japan's, was relatively stable compared with Europe and the United States.
The MSCI index of Asia-Pacific stocks excluding Japan was down 7 percent to its lowest in almost four years and has fallen 20 percent this week alone. The all-country world stocks index fell to the lowest since November 2003.
Hong Kong's Hang Seng index dropped 8 percent to a near three-year low. The market value of companies listed on the index has lost almost half its value since the year began.
South Korea's KOSPI ended 4.1 percent lower, managing to cut some of its losses after the heads of local brokerages met to propose a market stabilization fund.
The Chicago Board Options Exchange Volatility index (VIX), seen as a gauge of investor fear, on Thursday hit an all-time high of 64.92, as investors scrambled to buy increasingly expensive protection against erratic price action.
Global equity markets have declined with brutal swiftness, sending investors to U.S. Treasury debt despite weakness in recent days on expectations for a glut of new issuance.
The 10-year note rose 5/32 in price, taking its yield to 3.75 percent from 3.78 percent. Rates on one-month T-bills fell to just 0.066 percent, from 0.080 on Thursday and 1.55 percent as recently as September 11, as the very short end of the market continued to act as a source of funding with other avenues all but shut down.
WHAT MORE CAN BE DONE?
Credit markets were nearly broken. The cost of protection against defaults in Asia's sovereign and corporate debt soared to record highs, traders said.
The iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion for the region's "junk"-rated credit, soared about 90 basis points to a record 890/940 bps, a Singapore-based fund manager said. But traders warned of little activity in the credit markets, which tends to magnify price differences.
Extreme market volatility stoked talk that the major central banks would have to reduce interest rates again, just days after a concerted round of cuts led by the Federal Reserve and European Central Bank. There were also reports the U.S. Treasury was under intense pressure to inject funds directly into commercial banks.
"It highlights the enormity of the issue and the problem faced by the G7," said Adam Carr, a senior economist at broker ICAP in Sydney. "Given the muted response in markets, certainly I think more rate cuts are to come, as ineffective as they are proving. Lets hope the G7 propose a good dose of fiscal medicine to the real economy as well."
Whether or not global policymakers have anything more planned, time was running thin.
The spread of 3-month London interbank offered rates over the 3-month U.S. Treasury bill yield widened to 426 bps, increasing more than 300 bps in the last month, with cash being hoarded and practically no lending between banks.
Japanese government bond futures dropped 1.1 points to 137.35, with investors in a frantic rush to secure cash with domestic money markets succumbing to the freeze around the world.
The euro slid to a three-year low of 132.80 yen before trimming losses to 133.70 yen. The U.S. dollar hit a six-month low of 97.91 yen before clawing back to 98.70 yen.
The Intercontinental Exchange's U.S. dollar index, which measures the dollar's value against a basket of major currencies, climbed 0.6 percent to 81.939, the highest since August 2007.
U.S. crude oil futures fell 4.9 percent to $82.33 after earlier hitting a 12-month low of $82 a barrel on concerns the growing financial crisis would sap fuel demand from countries like China.
The slowdown in the country's property and manufacturing sectors means it will take time to work through its metals and other raw materials stockpiles.
"With a steady stream of negative news dampening sentiment across the commodities complex, market players are hoping for supportive government measures to arrest the decline in commodity and equity prices," said Jing Ulrich, managing director and chairman of China equities with JPMorgan in Hong Kong.
Spot gold was relatively unchanged at $911 an ounce, though it gained 9.1 percent in the week.
(Additional reporting by Park Jung-youn in SEOUL, Wayne Cole in SYDNEY and Rafael Nam and Umesh Desai in HONG KONG, editing by Dhara Ranasinghe)
Oil plummets to $82 on global slowdown fears
Friday October 10, 2:53 am ET
By Alex Kennedy, Associated Press Writer
Oil plummets to 1-year low of $82 in Asia on fears global slowdown will cut crude demand
SINGAPORE (AP) -- Oil prices plummeted to a one-year low below $83 a barrel Friday in Asia as investor fears of a severe global economic downturn sparked a panicked sell-off of equities and crude.
Light, sweet crude for November delivery was down $4.35 to $82.24 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore, the lowest since October 2007. The contract overnight fell $1.81 to settle at $86.62.
"The whole market has lost confidence in everything," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "Everyone is worried about global growth, and oil is the front line commodity for that. There's just a lot of panic and fear in the market."
Investors have been unimpressed by interest rate cuts by the U.S. and other leading central banks this week to help unclog the credit markets and promote lending. A credit crisis that began last year in U.S. sub-prime mortgages has spread across the globe, forcing governments to spend hundreds of billions of dollars to bail out banks, brokerages and insurance companies.
Japan's benchmark Nikkei 225 index plunged more than 10 percent Friday while the Dow Jones industrial average fell more than 7 percent Thursday to its lowest level in five years.
"The problem is no one really knows how far and deep this will go," Pervan said. "But we can see from the size of the rescue packages, this is a really serious deal. This isn't a normal bear market."
Oil investors even ignored signs that the Organization of Petroleum Exporting Countries may cut production. OPEC said Thursday it will hold an extraordinary meeting Nov. 18 to discuss how the widening global financial crisis is affecting oil prices.
On Thursday, the head of Libya's national oil company, Shukri Ghanem, called on oil producing nations to cut output.
"OPEC is trying to jaw-bone the price up, but they'll have to come into the market because no one is going to be believe just jaw-boning with the market sliding so quickly," Pervan said. "The market is so demand focused, it doesn't even care what happens to supply."
OPEC's decision last month to cut production by 520,000 barrels a day failed to halt the losses, which have accelerated in recent days.
Oil prices have fallen about 44 percent since soaring to a record $147.27 on July 11.
"We haven't seen the bottom of this yet," Pervan said. "We thought $75 would be a floor but if the market mood doesn't change, $50 to $60 a barrel is not out of the question."
In other Nymex trading, heating oil futures fell 9.46 cents to $2.32 a gallon, while gasoline prices dropped 8.68 cents to $1.94 a gallon. Natural gas for November delivery rose 6.69 cents to $6.69 per 1,000 cubic feet.
In London, November Brent crude fell $3.66 to $79.00 a barrel on the ICE Futures exchange.
Sources: US nears removing NKorea from terror list
By MATTHEW LEE, Associated Press Writer
43 minutes ago
The Bush administration is nearing a decision to remove North Korea from a terrorism blacklist and may do so as early as Friday in a bid to salvage faltering nuclear disarmament talks, The Associated Press has learned.
U.S. officials said Thursday that no final decision had been made but diplomats briefed on the matter told the AP that they believe an announcement that North Korea will be tentatively taken off the State Department's list of state sponsors of terrorism is imminent.
The delisting depends on North Korea agreeing to a plan to verify an account of its nuclear activity that it submitted over the summer, the diplomats said. North Korea would be put back on the list if it doesn't comply with the plan and abandon nuclear arms, they said.
The diplomats spoke on condition of anonymity ahead of an expected announcement, which would follow meetings last week in Pyongyang between North Korean officials and U.S. envoy Christopher Hill as well as days of intense debate in Washington.
The move would be a last-ditch attempt to save a disarmament agreement that has frayed badly in recent months as North Korea moves to restart its main nuclear plant and takes other provocative steps such as expelling U.N. inspectors and launching short-range missiles.
Saving the deal and getting Pyongyang to follow through would also be a major foreign policy success for the administration in its waning months.
But opponents of the deal, mainly conservative hawks in and out of the administration, say removing the North from the terrorism list now would be a reward for bad behavior from a country that cannot be trusted.
North Korea had disabled its Yongbyon nuclear facility under the initial phases of the deal but since August has been reversing that because the United States has not removed it from the terror list as it agreed after North Korea provided a declaration of its atomic program in June.
The U.S. has said it will fulfill the obligation only when North Korea accepts a plan to verify that accounting.
But while he was in North Korea, Hill proposed a face-saving compromise under which the North would be provisionally removed from the terrorism list as soon as it deposits with China an agreement on verification, according to U.S. officials.
China, the chair of the six-nation nation negotiations, would then announce that the North Koreans were on board, allowing Pyongyang to claim that Washington moved first, they said.
Despite signs the delisting is close, details of what North Korea is prepared to allow in terms of inspections of its nuclear sites are unclear. The specifics of Hill's discussions with the North are closely held in Washington among a tight circle of top Bush aides, officials said.
White House press secretary Dana Perino said agreement on a "verification protocol" remained the key to taking North Korea off the list. "If we can get a verification protocol that we are satisfied with, then we would be able to fulfill our side of the bargain," she said.
Later, amid a swirl of speculation in Washington, Seoul and Tokyo that the delisting would come on Friday, National Security Council spokesman Gordon Johndroe would say only that "no final decision has been made yet."
___
Associated Press writer Deb Riechmann contributed to this report.
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