Global stock markets have been taking a beating for months now amid fears that an outright debt default by Greece would undermine the European banking system, and as the third quarter ended on Friday, many major indexes had recorded their worst quarterly drops since the financial crisis in 2008.
Monday brought yet more declines.
In Hong Kong, the Hang Seng index, which fell 21.5 percent during the last quarter, started the new quarter with a 4.5 percent drop by midafternoon.
In Taiwan, the Taiex ended 2.9 percent lower, and the key index in Australia shed 2.8 percent.
European markets, too, looked set to fall steeply at the open.
The markets in mainland China and Korea were closed for holidays.
In Japan, the Nikkei 225 index closed 1.8 percent lower despite news that confidence among larger manufacturers had improved somewhat during the third quarter as the country continued its recovery from the devastating earthquake and tsunami that struck on March 11.
The Tankan, a quarterly survey that is conducted by the Bank of Japan and is closely watched as a barometer of the Japanese economy’s heath, rose to plus-2 in September, from minus-9 in June.
But the index remained below the pre-quake level, and large companies said they planned to increase capital spending by just 3 percent during the current financial year — less than economists had expected.
The capital expenditure plans show “that the global financial gloom is definitely hurting business confidence in Japan,” Takuji Okubo, an economist at Société Générale in Japan, said in a research note.
The yen’s persistent strength is another factor restraining capital expenditures, he added. The yen has firmed from around 83 per U.S. dollar in January to just above 77 yen on Monday, a troubling development for Japanese exporters, as it has made their goods more expensive for overseas consumers.
The euro, by contrast, has been undermined by the European debt woes. The currency was hovering at around $1.3325 in Asian trading — its lowest level since January — down from $1.3387 at the New York close on Friday.
European finance ministers are due to meet later on Monday, and a succession of other international meetings are planned in coming weeks as policy makers try to stem the crisis.
Greece acknowledged over the weekend that it would miss its deficit-reduction target despite desperate action to slim down its bloated public sector, which also hurt market sentiment on Monday.
The Greek government is in a race against time to convince representatives of the European Commission, the European Central Bank and the International Monetary Fund, known as the troika, that it will make good on pledges to put its financial house in order. Without the release of about €8 billion, or $11 billion, in aid — part of a €110 billion bailout agreement — Greece could run out of money this month and face a default that would shake the euro zone and global markets.
The decision on whether to release the cash is expected to be made on Oct. 13 at an extraordinary meeting of European finance ministers, but it will depend on the troika officials, currently in Athens, issuing a positive report about Greece’s efforts at fiscal overhaul. A chief source of frustration for foreign auditors has been the delays in carrying out reforms and an apparent reluctance by the government to reduce the country’s public payroll.
Niki Kitsantonis contributed reporting from Athens.
Article source: http://www.nytimes.com/2011/10/04/business/global/daily-stock-market-activity.html?partner=rss&emc=rss