Asian stocks tumble on news from US and Europe
Published: 06 August, 2011, 08:39
Edited: 06 August, 2011, 14:49
Asian markets plunged on Friday following carnage in US and EU markets amid fears of a double-dip global recession. And the dollar has yet to face the markets when they respond on Monday to the US credit rating downgrade by Standard and Poor’s.
The sell-off in Asia followed the biggest one-day points decline on Wall Street since the 2008 financial crisis.
Stocks in India and Japan have gone into nosedive as confidence built by America’s move to raise its debt ceiling on Tuesday ebbed away.
Asian observers of the American political scene have been unimpressed by the brinkmanship which delayed a resolution of the debt ceiling issue until the 11th hour. A number of Chinese newspapers went so far as to call the whole debacle immoral and irresponsible.
The US credit rating downgrade is expected to cause yet more worries in Asia, bringing anxieties over America’s financial health to a tipping point after all the other debates and decisions of the past week.
With the dollar hitting its lowest point in several years, a critical mass of opinion is building in Asia over whether it should continue to be used as a reserve currency.
Asia has a vested interest in what is going on in the United States as they hold three trillion dollars of US debt, so what happens in America clearly affects what happens in Asia greatly. If Americans do not have jobs, then they are not spending money on consumer goods – and in many cases that means Asian exports.
With confidence at a nadir in Asia now, the stock market meltdown comes as no great surprise to many analysts who predicted at the beginning of week that a slump was on the horizon.
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