Asian markets slump on worsening Euro debt crisis
BANGKOK (AP) — Asian markets were sharply lower Monday amid signs of U.S. economic sluggishness and escalating worries about Europe's debt crisis after Italy and Greece were slapped with credit downgrades.
Oil prices fell to near $99 a barrel Monday in Asia as a stronger U.S. dollar made commodities more expensive for investors with other currencies.
Japan's Nikkei 225 slid 1.4 percent to 9,474.83; South Korea's Kospi tumbled 1.8 percent to 2,073.01 and Hong Kong's Hang Seng index slumped 1.6 percent to 22,817.95.
Shares of Japanese auto maker Honda Motor Corp. were down 1.6 percent as the company announced its workers would take 14 days off this summer because of production interruptions caused shortages of parts. The work days will be made up for those days later in the year.
Operations at Honda, like scores of other manufactures, were severely hindered following a devastating earthquake and tsunami on March 22 struck Japan's industrial northeast. The region, largely wiped out, was home to hundreds of companies that manufacture parts for the country's powerhouse manufacturing industry.
In Europe, meanwhile, Standard & Poors cut its ratings outlook for Italy's debt from stable to negative Saturday, citing the country's poor growth prospects and concerns about the government's ability to reduce public borrowing. But with a ratings outlook still at A+/negative, Italy remains in far better shape than Greece.
Credit ratings agency Fitch cut Greece's long-term credit rating further into junk status on Friday, saying the indebted country faces challenges changing its economy and government to reduce debt. Investors remain concerned that Greece will have to stretch out its debt repayments or pay creditors less than what they're owed. Europe's banks, especially those in Greece, hold lots of Greek bonds, and a restructuring could hurt them.
Also in Europe, Spain held regional elections last weekend, leading to speculation that new politicians might say the country is even more deeply in debt than the current government had forecast. That raises the possibility that Spain would need to seek a bailout, following the path of Greece, Ireland and Portugal.
In New York on Friday, stocks closed broadly lower for a third straight week on signs that U.S. consumer demand may be weakening.
Retailers Gap Inc. and Aeropostale Inc. each lost more than 14 percent Friday after cutting their profit forecasts for the year, in part because of higher costs for raw materials and sluggish sales. That was a worrying sign for investors who had counted shoppers to lead a recovery in spending.
The Dow Jones industrial average fell 0.7 percent to 12,512.04. The Standard & Poor's 500 index lost 0.8 percent to 1,333.27. The Nasdaq composite dropped 0.7 percent to 2,803.32.
May is traditionally a weak month for the stock market. Traders have little to base buying and selling decisions on with corporate earnings season officially over and economic news scarce.
Benchmark crude for June delivery was down $1.11 to $98.99 a barrel in electronic trading on the New York Mercantile Exchange.
The euro dropped against the greenback to $1.4085 from $1.4201 in late trading in New York on Friday. The dollar strengthened to 81.93 yen from 81.57 yen.