Asian stocks off their lows after DOW drops 600

A gut-wrenching drop in the US markets in overnight trades hurt the sentiments for the Asian stocks though an intraday recovery caps the losses

A gut-wrenching drop in the US markets in overnight trades hurt the sentiments for the Asian stocks today, though the investors nibbled select stocks at attractive valuations after the latest spate of losses. The markets were off their lows but global growth worries rule the roost. The US markets took a massive beating yesterday with S&P 500, the index that measures broad US stock market activity, slumping down 7%, witnessing its largest drop since December 2008. DOW slumped by a whopping 635 points, or 5.5% to close at 10,855.87.



US President Barack Obama said he disagrees with the S&P downgrade, but he hopes it will prompt lawmakers in Washington to agree on what he called a balanced approach to debt and deficit reduction – including higher taxes for the wealthy and cuts in spending on social programs.

The debt ratings downgrade continued to play its role as investors took a clear fight to safety, making gold rush up in a hurry and striking highs of $1780 per ounce mark. After the Standard & Poor's downgrade of US debt, America now carries a rating of AA-plus instead of the coveted AAA rating on its Treasury bonds. The downgrade puts the world's largest economy in the company of Japan, China, Spain, Taiwan and Slovenia.

The Japanese stocks were hit hard though the indices overcome the massive intraday losses. The benchmark Nikkei 225 index closed 1.68 percent lower at 8944 points, recovering from a more than 4 percent drop earlier in the session. The overall outlook remains depressing for the economy as it tries to mend its way out of the natural catastrophe in March this year. Global ratings agency Moody's stated today that the impact of Japan's currency market intervention last Thursday to weaken the yen was limited, indicating that the export heavy manufacturing sector of the country could be in for more pain.

In Australia, the markets slipped initially but recouped the losses on bargain hunting and a moderate bounce in base metal prices. The S&P/ASX 200 index had stumbled nearly 5.5% in early trade after a wipeout session on Wall Street but jumped back in green to settle with gains of 48.7 points or 1.2% at 4034.80.

However, in China, the stocks edged up even as the consumer price inflation spiked to 6.5% in July from June's 6.4%, beating the forecasts. The market slipped just like all other Asian equities and the benchmark Shanghai Composite Index dropped to a 12-month low before edging up. The barometer closed at 2526.07 in the end, almost on a flat note.

In India, stocks cut losses in late trade as bargain hunting emerged after a recent sharp sell-off in share prices. The 50-unit S&P CNX Nifty regained the psychological 5,000 levels after falling below that mark for the first in more than 14 months at the onset of the trading session. The barometer index BSE Sensex fell below the psychological 17,000 mark after regaining that level for a brief period in afternoon trade. As per provisional closing, the BSE Sensex was down 94.24 points or 0.55% to 16,895.94. The Sensex lost 558.18 points at the day's low of 16,432 in early trade, its lowest level since 1 June 2010. The index rose 144.86 points at the day's high of 17,135.04 in afternoon trade

In other markets, the Hang Seng index in Hong Kong slumped 5.66%, Seoul Composite Index in South Korea slipped 3.64% while Taiwan Weighted Index dropped 0.79%. Gold jumped to record highs of $1780 per ounce, witnessing a smashing gain of nearly $100 in last two days. WTI Crude slumped near $75 per barrel for edging up near $80 per barrel.