Asian markets witness bloodbath amid Middle East skirmish

Most indices end with steep losses, DOW futures down more than 100 points

Asian stocks dipped sharply today as poor week continued amid gyrating political tensions in the Middle East. Worries over the violent protests in Libya could lead to a further spread of the current public uprising in the Middle East region hurt the sentiments and stocks mostly ended with steep losses today. The US markets were closed yesterday on account of the Presidents' Day holiday but the DOW futures skidded intensely lower today, shedding more than 100 points and making it impossible for the indices in Asia to launch a late comeback as they did in the last session.



The Japanese stocks were in a free falling mode today, giving up nearly 2% in intraday moves global credit rating agency Moody's decision to downgrade country's rating outlook to "negative" from "stable". The rating action was prompted by heightened concern that economic and fiscal policies may not prove strong enough to achieve the government's deficit reduction target and contain the inexorable rise in debt. At the end of the last month, one of the other leading global rating agency Standard & Poor's (S&P) had downgraded Japan's credit rating from AA to AA-, citing Japan's worsening debt situation for the move. The benchmark Nikkei 225 Index pared 192.83 points, or 1.80% to stand at 10,664.70 by the close.

In Australia, markets slid lower with resources dropping heavily on the drop in industrial metals. The economic cues were bleak with a new research revealing that Australian business conditions were deteriorating even before the onset of the devastating floods in Queensland. Reports revealed that the National Australia Bank's business confidence index fell to 5 in the fourth quarter of 2010 from 9 in the preceding quarter. A reading above zero means optimists outnumber pessimists. Reports further revealed that the business conditions index also sagged, falling three points over the fourth quarter to 2. The benchmark S&P/ASX200 Index dropped 43.30 points, or 0.88 percent, at 4,856.70 points.

For Chinese equities, a bounce in the last session was seen reversing entirely as the stocks fell the most in a month on worsening violence in oil-producing Libya and surging energy prices, which fanned inflationary worries. Though the latest inflation numbers were slightly less than expected, the overall inflation is still running close to 5% and a rapid jump in crude prices is the last thing China wants after having resorted aggressively to monetary tightening efforts in the last few months. The benchmark Shanghai Composite index shed 76.73 points or 2.62% on the day to close at 2855.52 points, enduring severe losses once the critical 2900 levels gave up.

In Mumbai, the key benchmark indices edged lower in a volatile trading session as macroeconomic worries arising from surging crude oil prices and geopolitical tensions due to crisis in Libya weighed on the sentiment. Global stocks fell as investors were worried about the risk of the unrest in Libya spreading to bigger economies such as Saudi Arabia and China. Eleven out of 13 sectoral indices on BSE were in negative zone. The market breadth was weak. Auto, metal, banking and capital goods stocks declined. Consumer durables stocks bucked weak trend. As per provisional figures, the BSE 30-share Sensex was down 127.84 points or 0.69% to 18,310.47. The index rose 19.59 points at the day's high of 18,457.90 in mid-morning trade. The Sensex fell 250.98 points at the day's low of 18,187.33 in late trade.

In other markets, the HangSeng Index In Hong Kong tumbled 2.11%, the Strait Times Index In Singapore slipped down by 1.68% while KOSPI Index in South Korea crashed by 1.76%. In commodities, oil slipped slightly after shooting up by nearly 8 dollars in the last session as traders eyed a probable civil war that risks Libya's oil wealth. The country is one of the key oil producers in the world and it exports around 1.6m barrels a day, making it the ninth-largest producer in the OPEC group.