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WSJ: Market Watch
written by Sarah Turner
Thursday August 4, 2011, 11:32 p.m. EDT
SYDNEY (MarketWatch) — Asian shares nose-dived on Friday, joining in a global rout, as fears about economic growth and European debt woes reached fever pitch ahead of a key report on U.S. jobs
The Hang Seng Index: -4.69% fell 4.4%, while the Shanghai Composite index: -1.88% dropped 1.7%.
Japan’s Nikkei Stock Average: -3.35% tumbled 3.4% in the morning session, while Australia’s S&P/ASX 200 index:-3.91% fell 4%, and South Korea’s Kospi: -3.09% dropped 2.9%.
Energy companies and financial firms were among the worst performers in Asia.
On Thursday, European shares tumbled and U.S. stocks fell into correction mode, with the Dow Jones Industrial Average (DJIA): -4.31% shedding 4.3% in the session. Read more on U.S, stock action.
Following an interest-rate decision by the European Central Bank, ECB President Jean-Claude Trichet indicated that the central bank has resumed bond purchases while highlighting downside risks to economic growth as the region struggles with sovereign-debt issues. Read more on ECB meeting.
“The European Central Bank did not come out with any tangible solution to the European problems. I think that’s what’s driving it,” said Emil Wolter, head of regional strategy for Asian equities at Royal Bank of Scotland in Singapore, speaking about the global equity-market sell-off.
“You have a combination of these financial problems in Europe, and then you have the reality that growth in advanced economies is down to a trickle. This is true in Europe, the U.S, and Japan. So these are basically the two pressure points leading markets into a nosebleed situation today,” he said. Read story on U.S. economic indicators.
Others cited policy moves to combat global market issues, which are currently being made on a ad-hoc basis.
“What we’re seeing this week is very much a lone-wolf style policy“ response to adverse economic and market conditions, said Sue Trinh, strategist at RBC Capital Market.
“The Bank of Japan has pretty much gone it alone, the Swiss National Bank acted alone, and the Turkish Central Bank cut rates unexpectedly. All of these things don’t generate a lot of confidence,” she said, referring to unilateral Japanese and Swiss foreign-exchange intervention.
U.S. jobs data is on tap for later in the global day and economists surveyed by MarketWatch expect that the U.S. likely gained 75,000 jobs last month. Read U.S. jobs preview story.
“In light of recent developments, that number has much greater importance than it usually would. We would really need to see a significant upside surprise in order to alleviate recent markets concerns about global growth prospects,” said Trinh.
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