Investing.com - Asian stocks fell sharply in Thursday trade, mirroring heavy losses on Wall Street as dealers took a dim view of the Italian bond market and the implications that another euro-zone country could fall victim to the region’s debt threat.
During early Asian trade, Hong Kong’s Hang Seng Index nosedived 4.61% to 19,091.40, Japan’s Nikkei Index fell 2.26% to 8,557.35, while Australia’s S&P/ASX 200 sank 2.77% to 4,225.90.
The Topix Index of all shares listed on the first section of the Tokyo Stock Exchange, stumbled 2.38% to trade at 731.59.
A day after the announced resignation of Italian Prime Minister Silvio Berlusconi Italian bonds rose above 7%, the same level at which Ireland, Portugal and Greece were forced to plead for rescue funds from international agencies.
A new Italian government faces implementation of deficit reduction measures to help tackle the nation’s public debt, currently at 120% of gross domestic product, second to Greece among euro-zone members.
Prime Minister Berlusconi, Tuesday, said he would resign once parliament passed the austerity bill, a USD63 billion package that convinced the European Central Bank to buy Italian bonds in an effort to reduce borrowing costs.
Shares on Wall Street tumbled on the prospects of an Italian default, with the Dow Jones Industrial Average slumping 3.2% to 11,780.90, the Nasdaq Composite Index sank 3.9% to 2,621.65, and the S&P 500 plummeted 3.7% to close at 1,229.10.
Meanwhile, the Japan’s Economic and Social Research Institute reported Thursday that core machinery orders, an indication of capital spending, dropped by 8.2% in September, down from an 11% gain the previous month.
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Earlier Wednesday, Australia’s Bureau of Statistics reported that the nation’s unemployment rate remained unchanged in October at a seasonally adjusted 5.2%, unchanged from the previous month.
Market expectations were for the jobless rate to rise to 5.3% last month.
Resource issues in Sydney were among early losers, with BHP Billiton Ltd. off by 2,7%, Rio Tinto Ltd. down 3.4% and Fortescue Metals Group Ltd. sinking 6%.
Shares of Japan’s largest automaker, Toyota, were down 2.3% after the company announced the recall of nearly 550,000 vehicles worldwide late Wednesday.
Other Japanese exporters on the decline included, Nissan Motor Co., falling 2.8%, Sony Corp. dropped 4.7% and Kyocera Corp. lost 3.7%.
Banks and financials fared poorly in an atmosphere of pessimism on global economies; HSBC Holdings Plc. in Hong Kong plummeted 7.8%, Industrial Bank of Korea dropped 3%, Commonwealth Bank of Australia lost 2.9% and Mitsubishi UFJ Financial Group Inc. fell 3.5%.
The outlook for European stocks was pessimistic. France’s CAC 40 futures was lower by 0.15% to 3,027.10, Britain’s FTSE 100 futures fell 0.06% to 5,372.00, while Germany’s DAX futures surrendered 0.24% to 5,736.20.