{"id":9922,"date":"2011-08-08T18:08:08","date_gmt":"2011-08-08T18:08:08","guid":{"rendered":""},"modified":"2011-08-08T18:08:08","modified_gmt":"2011-08-08T18:08:08","slug":"Asian-shares-nosedive-but-recover","status":"publish","type":"post","link":"https:\/\/asiancemagazine.com\/?p=9922","title":{"rendered":"Asian shares nosedive but recover"},"content":{"rendered":"

Asian shares tumbled today as investors scrambled to adjust to a rapid downgrade in the outlook for U.S. and global economic growth, but later staged a sharp rebound from early lows, helping cushion expected losses in Europe.<\/strong><\/p>\n

U.S. S&P 500 index futures pulled back sharply from earlier lows and crept into positive territory<\/strong>, while European index futures .STXEc1 also pared early losses and were trading down around 0.5 percent.<\/p>\n

Major indexes in Asia slumped in early trade following a drop of more than 6 percent on Wall Street on Monday in the first trading session since the historic downgrade of the United States’ AAA credit rating by Standard & Poor’s.<\/p>\n

Many market watchers fear the move will exacerbate the U.S. economic slowdown by further undermining business and consumer confidence, possibly tipping the country back into recession.<\/p>\n

Tokyo’s Nikkei .N225 closed down 1.7 percent, having been down more than 4 percent at one stage, and MSCI’s broadest index of Asia Pacific shares outside Japan was down 1.9 percent, after tumbling more than 6 percent earlier.<\/strong><\/p>\n

“Panic selling is generally followed by quick recoveries however the past two days have been driven more from thoughtful risk aversion … indicating that this downturn may be more cyclical and potentially long-term in nature.”<\/p>\n

While the U.S. downgrade late on Friday was the most obvious blow to confidence, investors have also been spooked by data suggesting the U.S. economy was stalling and Europe’s ever-worsening sovereign debt crisis.<\/strong><\/p>\n

There are also concerns about China’s inflation rate, which analysts fear could curb Beijing’s ability to stimulate demand to offset a global slowdown.<\/p>\n

“The macroeconomic picture outside of Asia is bleak and Asia’s ability to remain immune is doubtful in the extreme,” said Alex Hill, co-founder of Singapore-based hedge fund Tantallon Capital, which manages more than $300 million.<\/p>\n

Chinese data on today failed to offer respite, showing consumer price inflation hugging three-year highs in July.<\/p>\n

Source Reuters<\/em>
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