Global stocks dive on fears over Hungary

BANGKOK (AP) – World stock markets tumbled yesterday, dragged down by weak US employment figures and fresh fears that Europe’s debt crisis is spreading to Hungary.

Wall Street is poised to open lower when trading resumes on Monday after the Dow Jones Industrial Average suffered a sharp 323.31-point drop to close at 9,931.97 Friday, finishing solidly below the psychologically sensitive 10,000 level. It was the weakest close for the blue-chip index since Feb. 8, 2010.

Global oil price was also buffeted, falling to near $70 a barrel, while the dollar fell against the yen and gained versus the euro.

A selling wave was sparked in Asia, dragging down the Philippine Stock Exchange index (PSEi) in turn by more than 90 points on fears that Europe’s debt problems could spread after Hungarian officials said last week the nation was at risk of a Greek-style fiscal crisis.

The benchmark Philippine Stock Exchange index plunged 2.7 percent or 90.94 points to finish at 3,266.11 points. The all-share index retreated by 1.96 percent or 41.70 points to 2,082.16. Trading volume at the PSE reached 746.75 million shares valued at P3.03 billion ($65.48 million), with a heavy net foreign selling of P710.21 million ($15.29 million). Decliners thumped advancers, 95 to 14, while 51 shares did not move. All six counters finished in the red, led by the property counters which tumbled by 4.39 percent.

“Following a successful and sustained breakout from the major 3,330 resistance line, investors have turned largely undecided. The Dow’s 323.31 points slide Friday night dampens confidence that supported last week’s surge,” said Justino Calaycay, analyst at local brokerage firm Accord Capital Equities Corp.

Last week has become too tempting, if not compelling, for some local investors to book their gains especially after the US market’s decline, Calaycay said.

“The problem seems like a cancerous thing - it’s spreading from smaller country to smaller country, and many people are afraid that it will spread to a big country like France or Germany, although that’s unlikely,” said Jackson Wong, vice president at Tanrich Securities, in Hong Kong.

“We don’t have major good news on the horizon. We still have crises down the road.”

Major European stock indexes were lower in early trading. The FTSE 100 index of leading British shares slid 85.28, or 1.67 percent, to 5,040.60 while Germany’s DAX sank 79.26 points, or 1.3 percent, to 5,859.75. The CAC-40 in France stood at 3,387.74 points, lower by 2 percent or 67.11 points.

Major Asian markets were also sharply lower yesterday with Japan’s benchmark Nikkei 225 stock plunging 380.39 points, down 3.8 percent, to 9,520.80.  

South Korea’s Kospi lost 1.6 percent to 1,637.97 while Australia’s S&P/ASX 200 was down 2.8 percent at 4,325.9. Hong Kong’s Hang Seng dropped two percent to 19,378.15. Benchmarks in mainland China, Singapore and Taiwan also slid.

Apart from Hungary’s woes, markets were also knocked down by disappointing US jobs data. The US government’s May jobs report showed Friday the US economy created 432,000 jobs last month, far fewer than the expected 513,000. Most of the jobs were temporary hiring by the government for the U.S. census.

The result underlined that the US economic recovery is not yet picking up the momentum that investors have been looking for. The Dow Jones industrial average plunged Friday 3.2 percent to 9,931.97. Major indexes all lost more than 3 percent.

Castor Pang, director of research at Cinta International in Hong Kong, said the jobs figures were “much poorer than expected” and a key factor in driving down Asian stocks. Markets were likely to seesaw throughout June.

“Volatility is very great due to lack of confidence,” Pang said, calling some investors “very fearful.”

Investors seeking the safety of the dollar helped lift it against the euro yesterday. The euro fell as low as $1.1878 - falling below $1.19 for the first time since March 2006 - before pulling up to $1.1922 in early European trading. That was still below the $1.1943 it bought in New York on Friday.

The dollar fell against the Japanese currency, falling to 91.46 yen from 91.80 yen.

Benchmark crude for July delivery was down $1.20 to $70.31 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $3.10 to settle at $71.51 on Friday.

At the Philippine Dealing System (PDS), the peso weakened by 53.50 centavos to settle at 46.835 to a dollar from Friday’s 46.300 to $1. The peso opened weak at 46.490 to $1 before hitting a high of 46.490 and a low of 46.850 to $1. Trading volume amounted to $971.67 million on an average rate of 46.792 to $1. - with Xinhua News Agency