World stocks dampened by dim earnings

Asian stocks tumbled on Monday followed by losses across European and United States markets on concern over company earnings and increasing gloom about prospects for the global economy, analysts said.

Wall Street stocks opened lower as Wachovia bank, one of America’s largest retail banking groups, announced a net loss of $350-million.

World stock markets fell on Monday “with investors coming to terms with General Electric’s profit miss [last Friday] and news on Wachovia losses”, said Keith Bowman, equity analyst at Hargreaves Landsdown.

The biggest falls on Monday were seen in Asia, where the Shanghai market plunged by 5,62% ahead of upcoming growth and inflation figures. Investors were also spooked by rumours of possible government controls on speculative property investment, dealers said.

Tokyo slid 3,05%, Seoul closed 1,9% lower and Sydney gave up 1,8%. Hong Kong closed down 3,5% as Singapore lost 2,3%.

Asian dealers took their cue from New York where the Dow Jones industrial average had fallen by more than 250 points on Friday after US conglomerate General Electric said its profits were hit by the credit-market turmoil and downgraded its outlook.

“Concerns about US corporate earnings are increasing as companies may lower their profit forecasts,” said Maki Shimizu, an analyst at UBS Securities.

Nearing the end of European trade on Monday, London’s FTSE 100 index of leading shares had fallen by 0,69%, Frankfurt’s DAX 30 shed 0,74% and in Paris the CAC 40 declined by 0,42%.

Ministers from the Group of Seven (G7) rich countries ended a weekend summit with a communiqué that expressed concern about the global economic slowdown and credit crunch but outlined few concrete measures to tackle it.

Instead the finance chiefs from Britain, Canada, France, Germany, Italy, Japan and the US backed proposals to improve banking transparency and accounting to try to prevent a repeat of the worst financial crisis in decades.

“The G7 worked out measures that may contribute to the medium-term stability of the credit markets, but failed to offer anything that would have short-term effects,” said Shinko Securities market analyst Yutaka Miura.

Investors were, meanwhile, looking ahead to more earnings updates this week from major players in the US financial sector.

“Another nervous week ahead as the US earnings season unfolds and key financial names such as Citigroup and Merrill Lynch are expected to announce important restructuring measures,” said Commerzbank analyst Luis Costa.

He added that a busy earnings calendar in a week full of economic indicators presented “a good scenario for more volatility” on equity markets.—AFP

.

Client Media Releases

ITWeb, VMware second CISO survey under way
Doctoral study on leveraging the green economy
NWU's LLB degree receives full accreditation
Trusts must register as home builders