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World stock markets skid on earnings jitters
2009-01-13
LONDON (AFP) - Global equity markets sank on Tuesday, with Asia and Europe spiralling lower after fresh losses overnight on Wall Street, as worries mounted about weak corporate earnings, analysts said. Tokyo plunged by almost five percent as reports of a big loss at technology giant Sony stoked fears about the impact of the worldwide economic crisis on company results. In European late morning deals, Frankfurt fell 2.37 percent, London retreated 1.74 percent and Paris tumbled 2.16 percent. "The losses reported by Alcoa last night that kicked off the latest round of US earnings ... help undermine confidence in general," said CMC Markets dealer Matt Buckland in London. US aluminium giant Alcoa reported a bigger-than-expected quarterly loss after New York markets closed on Monday, adding to investor jitters. Wall Street reopens at 1430 GMT. Alcoa, which last week announced massive job cuts and other cost-cutting moves, said its net loss for the past quarter was 1.19 billion dollars including hefty reorganization charges. "A disappointing start to the reporting season -- as seen in Alcoa's large loss -- is pressuring stock markets in Asia," said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong. Tokyo, which was closed on Monday for a holiday, was hardest hit on Tuesday, slumping 4.79 percent by the close. Media reports that Sony is set to post its first annual operating loss in 14 years due to weak demand added to the gloomy mood. Hong Kong share prices dived 2.2 percent, while Shanghai lost 1.95 percent after Shenzhen Development Bank posted a significant loss for the past year, dealers said. Analysts said the stock market falls reflected worries among investors about the health of the American economy after last Friday's poor jobs report, which eroded optimism about US president-elect Barack Obama's stimulus plans. "Investors' eyes are refocusing on the real economy," said Masatoshi Sato, a strategist at Mizuho Investors Securities. "News reports that Sony is likely to post an operating loss might be contributing to the deteriorating market sentiment," he added. Sony, a bellwether of corporate Japan, is reportedly set to sink into the red in the financial year to March. The Japanese icon is likely to post an operating loss of 100 billion yen (1.1 billion dollars) due to sagging demand and a stronger yen, the Nikkei business daily reported. Sony shares plunged 8.9 percent. The strength of the yen has become a major headache for Japanese exporters, who are also suffering from weak sales as consumers in the United States and Europe in particular tighten their belts to cope with recession. Overnight in New York, the Dow Jones Industrial Average fell 1.46 percent as traders braced for the start of a quarterly earnings season that is expected to highlight the impact of the deepening economic crisis. Even the once-booming Chinese economy is now feeling the pain, with exports dropping for a second month in December as the global crisis hits its trade-dependent economy. Renewed fears about the health of banking giant Citigroup also contributed to the sour mood, dealers said. Citigroup said it may sell a controlling stake in its Smith Barney brokerage business to rival Morgan Stanley.
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