News / Economy

Asian Markets Open Sharply Lower After US, European Plunge

Major Asian markets opened sharply lower Friday after concerns that another global economic downturn may be on the way sent U.S. and European markets plunging.

Tokyo's Nikkei, Sydney's Australian Securities Exchange, and Seoul's Kospi were all down about four percent shortly after opening.

Thursday, the Dow Jones Industrial Average in New York plummeted 513 points, or 4.3 percent, its largest drop since October 2008.  Other major stock indexes, the NASDAQ and the S&P 500, also fell sharply.

Financial analysts say investors are concerned the U.S. economy could be headed back into a recession.

The U.S. losses came as major European exchanges closed down nearly 4 percent.

Investors sold their holdings as indicators around the globe pointed to official worries about the state of the economies in the United States, Europe and Japan.

A U.S. report showed new evidence of the country's weak labor market.

A total of 400,000 unemployed workers made their first claims for jobless benefits last week, a figure that was down slightly from the week before.  Financial experts say the figure has to drop to below 375,000 and stay there awhile to give U.S. companies enough confidence in the national economy to hire more workers.

On Friday, the U.S. is releasing its monthly unemployment rate for July, but experts do not think it will be changed from June's 9.2 percent figure.

Meanwhile, the European Central Bank said it resumed purchases of bonds from indebted governments.  It was an effort to try to keep Italy and Spain from being engulfed in the continent's debt contagion that has already forced Greece to secure two international bailouts in the last year and Ireland and Portugal one each.

Japan pledged to inject $126 billion into its economy in an effort to weaken the yen so that the country's exports might prove more attractive to overseas buyers.

The U.S. has the world's largest economy, but investors have voiced little confidence in the country's sluggish recovery.  They shrugged off the impact of the agreement this week by U.S. President Barack Obama and Congress to increase the nation's borrowing limit and avoid an unprecedented default on the government's financial obligations.

Instead, traders dumped stocks as first, one report showed the pace of manufacturing has fallen to a two-year low, and then the unemployment claims number was only marginally improved.

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