Asian stocks tumble as doubts surface over US rescue planAsian share prices tumbled in early trade Tuesday, as doubts mounted over whether a drastic rescue package for the US financial sector could avert an economic meltdown.
Following strong rebounds in global markets on hopes the US government's 700-billion-dollar plan could rebuild shattered confidence, investors on Tuesday grabbed profits and sought refuge in safe havens such as gold and oil.
Hong Kong shares were down 2.2 percent in early trade as investors cashed in after the market had rebounded more than 20 percent since Thursday.
Australian share prices shed 1.9 percent in morning trade on worries about the rescue plan, while China's benchmark index fell almost one percent.
Singapore shares slid 1.84 percent in early trade, while South Korea traded flat after the KOSPI KOSPI Korea Composite Stock Price Index index had underperformed Monday.
Japan's financial markets were closed Tuesday for a public holiday.
Investors piled into gold and oil as they assessed whether the US Congress would endorse President George W. Bush's dramatic intervention to buy up troubled mortgage-backed securities Mortgage-backed securities (MSBs)
Securities backed by a pool of mortgage loans. from distressed banks.
Gold prices listed in Hong Kong opened at 906.00-907.00 US dollars an ounce on Tuesday, almost 30 dollars higher than its close on Monday.
Crude oil settled in Asian trade on Tuesday after the benchmark New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of futures contract soared more than 16 dollars overnight for its biggest one-day gain ever.
The contract for October delivery had rose 16.37 dollars a barrel to 120.92 dollars at the close of floor trading on the New York Mercantile Exchange New York Mercantile Exchange (NYMEX)
The world's largest physical commodity futures exchange. on Monday, but eased to just over 109 dollars in Asian trade.
The rally was partly driven by technical factors linked to the October contract's expiration at the close of trade, analysts said.
Confidence drained from stock markets as both US presidential candidates expressed strong reservations about the government's enormous bailout proposal while the US Congress asked for key concessions.
The doubts led the Dow Jones Industrial Average Dow Jones Industrial Average
The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. to plunge 3.27 percent overnight, giving back its gains from Friday's rally.
The Nasdaq composite slumped 4.17 percent and the Standard & Poor's 500 index shed 3.82 percent. There were also substantial declines on European markets, reversing huge rallies in recent days.
Merrill Lynch Chief North American Economist David Rosenberg said US President George W. Bush's rescue package would only provide some relief from the turmoil.
"We do not think it seriously changes the endgame Endgame
blind and chair-bound, Hamm learns that nearly everybody has died; his own parents are dying in separate trash cans. [Anglo-Fr. Drama: Beckett Endgame in Weiss, 143]
See : Death -- the US economy is in recession and likely to remain so," he said in a research note entitled "Capitalism takes a sabbatical".
"At best (the rescue package) merely removes what was looking like the worst case scenario
Worst Case Scenario is a reality show aired on TBS in 2002 in the U.S.. : the entire collapse of the global financial system and a deep global depression."
Rosenberg said the cost to the public purse of the plan was "akin to fighting another Iraq war."
The US dollar suffered on worries the package would exacerbate spiralling US-government debt, prompting more market uncertainty.
"It's more the ongoing confusion over the sketchy details," said Thomas Lam, treasury economist with United Overseas Bank Group.
The rising oil price and other inflationary pressures have meant that the ability of central banks to cut interest rates, and therefore encourage a reverse in the slowdown of their economies is severely limited.
The oil jump "is going to tie the Fed's hands to some extent," Russ Koesterich, chief investment strategist at Barclays Global Investors Barclays Global Investors is a subsidiary of British-based Barclays Bank which is in the investment management industry. It is the largest corporate money manager in the world, with over £936 billion (US$1.77 trillion) under management as of March 2006. , told Dow Jones Newswires Dow Jones Newswires is the real-time financial news organization owned by Dow Jones. Founded in 1882, its primary competitors are Bloomberg L.P. and Reuters. The company reports more than 420,000 subscribers -- including brokers, traders, analysts and fund managers -- as of July .
Global markets, reeling from months of uncertainty following the US subprime mortgage crisis, went into a tailspin tail·spin
1. The rapid descent of an aircraft in a steep, spiral spin.
2. Informal A loss of emotional control sometimes resulting in emotional collapse. last week after the collapse of US investment bank Lehman Brothers and the government rescue of insurance giant AIG AIG addressee indicator group (US DoD)
AIG American International Group, Inc
AiG Answers in Genesis (religious group in defense of Scripture)
AIG Artificial Intelligence Group
AIG Australian Industry Group .