Asia stocks at two-year low
Asian stocks fell to a two-year low on Tuesday, led by exporter shares, on fears the U.S. government will have to bail out the top mortgage finance companies, further destabilising the financial sector.
Prudential sales boosted by Asia marketsWall Street tumbled and shares of Fannie Mae and Freddie Mac fell to the lowest in nearly 20 years after an article in Barron's said a government bailout could wipe out existing holders of the two companies' common stock with other asset holders also suffering losses.
The news seemingly put the bottom in the worst housing crisis since the Great Depression further out of reach, and confounded those expecting a U.S. recovery, at a time when the euro zone and Japanese economies are shrinking and could be lumbering toward recession.
Worries about the global economy bolstered government bond prices, while the dollar was largely steady - taking a break from its sharp gains over the past two weeks.
"There's a bit of a down draft from what happened in the U.S. overnight and commodities are a bit weak, too," said Michael Heffernan, a strategist and senior client adviser at Austock Securities in Sydney.
Japan's Nikkei share average tumbled 2.65 percent to a one-month low. Shares of index heavyweights Fast Retailing, a clothing retailer, and Canon were among the biggest drags.
The MSCI pan-Asia equities index fell 1.7 percent to its lowest since July 2006, down 22 percent this year, while the MSCI's Asia-Pacific ex-Japan index fell for a third straight session to a 17-month low.
South Korea's KOSPI fell 2.15 percent, led down by consumer technology giant Samsung Electronics and the world's fourth-largest steelmaker POSCO.
Hong Kong's Hang Seng index declined 1 percent, led by property firms ahead of earnings due in the next few weeks.
"The Chinese stock market's steep losses since the Olympics (began) are also denting sentiment towards heavy industry such as steel makers and shipbuilders. There are worries the Chinese economy may not grow as robustly after the Olympics," said Won Jong-hyuck, a market analyst at SK Securities in Seoul.
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