Inflation concerns hit Asia-Pacific equities

Equities markets in the Asia-Pacific region were lower on Monday on concerns that growing inflation in the United States will cause the Federal Reserve to discontinue interest rate cuts and contribute to the slowing economy there. The Shanghai Composite was down 2.62 percent to 4,876.76 while South Korea’s Kospi index fell 2.91 percent to 1,839.82. The Straits Times index was 3.25 percent lower to 3,353.56 in Singapore. Indices in Australia lost over 200 points each, with the Sydney Ordinaries dropping 3.42 percent to 6,331.8 and the S&P/ASX200 down 3.52 percent to 6,263.5. Hong Kong’s Hang Seng index dropped nearly 1,000 points for a 3.51 percent decline to 26,596.58. In Taiwan, the Taiex was 3.54 percent lower to 7,830.85, a loss of almost 300 points while India’s Sensex fell nearly 800 points, or 3.84 percent, to 19,261.35.

Markets in Tokyo were also lower on sentiment Japanese banks were being expected to make too high a contribution to a fund meant to protect from exposure to the subprime mortgage crisis. The Japanese banks have been asked to contribute 30 percent of the total to the fund, which is being organized by US banks. The Nikkei 225 was down 1.71 percent to 15,249.79 and the Topix index dropped 1.9 percent to 1,472.7 while the Mothers market plummeted 6 percent to 784.12. Banks, steel groups and the pharmaceuticals sector all saw declines on the session.

European markets were also lower. The FTSE Eurofirst 300 was down 1.52 percent to 1,493.32. The Paris CAC-40 was 1.61 percent lower to 5,514.88 while the Dax lost over 120 points, or 1.55 percent, to 7,825.44 and Madrid’s IBEX fell over 1.65 percent, more than 250 points, to 15,318.5. Some utilities and some drinks groups saw gains while the telecommunications sector and banks were lower.

London’s markets saw declines as the FTSE 100 fell 1.86 percent to 6,277.8 and the FTSE 250 dropped 2.62 percent, almost 275 points) to 10,140.4. The general construction sector and tobacco groups saw gains. Losers on the day included home builders, property developers and investors, airlines, and the oil sector.

Wall Street was lower in mid-afternoon trade on continued skepticism over the Federal Reserve’s plan to rescue the credit markets and after speeches from former Fed chairman Alan Greenspan and US President George W. Bush admitted concerns about the US economy. In afternoon trade the Dow Jones Industrial Average was down 1.02 percent to 13,203.61 while the Nasdaq Composite was 1.72 percent lower to 2,590.47 and the S&P 500 had dropped 1.09 percent to 1,451.93. Manufacturers were mixed on mergers and acquisitions news, while some internet retailers saw declines.

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