Global stocks tumble on Greece woes

NEW YORK (AP) – Stock markets plunged around the world yesterday as fears spread that Europe’s attempt to contain Greece’s debt crisis would fail.

The Dow Jones industrial average plunged 225 points, its biggest drop in three months. The slide erased a 143-point gain on Monday.

Major Asian markets were also down as fears heightened that Greece’s debt woes could spread to other countries.

At the Philippine Stock Exchange (PSE), local share prices nosedived by 113.83 points to 3,176.85, mirroring the triple-digit drop in Dow Jones Industrial average overnight.        

Stocks have seesawed in the past week as Europe’s efforts to agree on a bailout package for Greece proceeded in fits and starts. An agreement finally came together over the weekend, but its ballooning size of $144 billion has investors worried that Europe would have an even tougher time assembling an aid package if a larger country such as Spain or Portugal were to get in trouble. Traders are concerned that weakening economies in Europe could jeopardize the recovery in this country.

The markets’ plunge wasn’t a surprise to some analysts who have warned for weeks that stocks were due for a retreat.

The drop in stocks brought a reminder that it doesn’t take much to rattle investors who are on alert for anything that could disrupt the economic recovery. The avalanche of selling could continue while investors await answers on Greece but analysts said most drops are likely to be mild because buyers have for months been using pullbacks as opportunities to buy.

The selling Tuesday after Monday’s advance was reminiscent of the fearsome swings in the fall of 2008 and early 2009 when investors were panicked over how bad the recession would get.

Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said the sudden turns in the market are to be expected as traders wrestle concerns that stocks are overheated.

“The market has kind of gotten itself into a volatile trading range,” Fullman said.

The trouble in Greece gave investors enough reason to worry that other cash-strapped European governments could follow Greece into asking for emergency loans. Traders have been skeptical that Europe can act on its own restore the credibility of its shared currency, the euro.

“One gets the feeling that the euro zone is turning out to be a basket case and of course rumors about Spain and Portugal’s sovereign debt aren’t helping. I suspect the market wants to take the euro to as low as $1.25 in the short term,” said Joanthan Cavenagh, currency strategist at Westpac in Sydney.

Markets in Japan, Korea and Thailand were closed for holidays.

Risk aversion lifted the dollar up, with its index gaining 0.26 percent on top of a 1.4 percent rise on Tuesday. That was the biggest daily gain so far this year and took the index to the highest since May 2009.

Oil extended losses falling toward $82, following the steepest one-day percentage loss in three months on Tuesday, on rising inventories and a firm dollar.

“A combination of worries including contagion to Spain and Portugal, policy tightening in China, debt concerns in the UK and Japan, all threaten to undo the positive message from economic data,” Mitul Kotecha, head of global FX strategy at Credit Agricole said in a note to clients.

The immediate attention remains on Greece and growing skepticism about Greece’s ability to carry out austerity measures in the face of rising domestic opposition, Kotecha said.

Risk Aversion Back

Hong Kong’s Hang Seng was trading over 2 percent lower, sliding to a nine-week low, with banking stocks falling across the board while Shanghai’s key index fell as much as 2 percent to its lowest in seven months.

The Shanghai composite is the region’s worst-performing index, falling more than 13 percent year-to-date as Beijing’s moves to tighten policy take a heavy toll on banking and real estate stocks.

“Even if the problems in the U.S. and Europe look like they will not filter down to Asia, investors are trying to unload their risk as soon as possible,” said Castor Pang, head of research at Cinda International.

“The HSI looks attractive at this level, but I don’t see any buy orders coming in,” Pang said.

Australian stocks fell 1.3 percent to their lowest level since early March with the resources sector leading losses.

Gold gave up its safe-haven status to the dollar, continuing to lose ground after dropping sharply overnight in step with a broad sell-off in commodities and stocks.

Heavy selling pulls PSEi down

Heavy selling in blue chips pulled the PSEi below the 3,200 psychological support level.

Meantime, the broader all-share index fell 57.65 points or 2.8 percent to 1,980.92.

All subindices finished in negative territory, with the holding firm sector down the most. It lost 4.6 percent.

Overall, market breadth was bearish as decliners swamped advancers, 126 to nine. There were 37 issues unchanged.

A total of 3.07 billion shares valued at P4.3 billion were traded.

Telecommunications giant Philippine Long Distance Telephone Co. was the most actively traded stock by value. It gave up one percent to P2,495 apiece.

Index stocks that were among the session’s top losers were DMCI Holdings Inc., International Container Terminal Services Inc. (ICTSI), and Energy Development Corp. (EDC).

DMCI plunged 10.4 percent to P15 while ICTSI dropped 8.9 percent to P25.50. EDC lost 7.1 percent to P5.20.

Other stocks that ended significantly lower were First Philippine Holdings Corp., which fell six percent to P52, and Megaworld Corp., down six percent to P1.26.