Tokyo's benchmark Nikkei-225 index declined sharply by over 9% to a 5-year low as fears of the credit crunch threatened to push the US and Europe into a deep recession. All Asian markets followed the Nikkei.
The Hang Seng index plummeted by over 1,000 points to around 15,000. The BSE SENSEX, which is currently trading, was down over 500 points and broke the 11,000-level a few times during intra-day trading. The Jakarta Composite index fell by 10%, prompting regulators to halt trading.
Yesterday, the Dow Jones shed 500 points to close near the 9,000-mark. The S&P 500 is nearing the 1,000-level. In Europe, all major indices closed down with the FTSE 100 taking a big beating. This morning, Prime Minister Gordon Brown announced an $85 bn rescue package for Britain's eight largest and most troubled banks, including HBOS and RBS. Yesterday, the Reserve Bank of Australia slashed its key interest rate by 1%, the most in 16 years, in an attempt to ward off a credit shortage.
In India, the Finance Minister tried to assuage investors and reiterated that the Indian Economy was fundamentally strong. Indeed, most Asian banks have no exposure to subprime loans, which triggered this mess. He assured investors that any capital shortage would be taken care of by the Government and regulatory authorities. However, this did little to cool sentiments as the market was still a sea of red.
The Indian Rupee (INR) has gone below the 48-mark against the US Dollar (USD), negating some of the advantages that could have been gained by crude oil (NYMEX Nov. delivery) trading at around $87/bbl, against an all-time high of $147/bbl. There are signals that the RBI has tried to defend the 48 mark for the rupee, but the acute shortage of dollars sees demand pressure growing, raising the value of the dollar. This is the case all over the world. Crude oil's decline is linked to fears that a recession in the US and Europe could lead to a drastic fall in demand.
Asian markets have done the worst all over the world, mainly because of Asia's dependence on US consumers. Factories across China, Japan and South East Asia, and call centres across South Asia, are doing less business due to the changed scenario. PM Gordon Brown has called for a joint-meeting of heads and Finance Ministers of the G-7, G-20 and the IMF to come together and do something concrete.
[All figures quoted are collected from news agencies]