Hang Seng drops nearly 400 points

Equities markets in the Asia-Pacific region were lower on Thursday on further concerns about US credit markets. The main exception to losses was the Shanghai Composite, which added 0.38 percent to 5,456.54. Australian indices saw the least of the losses as the S&P/ASX200 fell 0.15 percent to 6,078.7 and the Sydney Ordinaries dropped 0.2 percent to 6,147.3. Taiwan’s Taiex was down 0.34 percent to 8,057.27. Elsewhere in Asia, South Korea’s Kospi index fell 1.07 percent to 1,824.78. India’s Sensex dropped 1.38 percent, nearly 300 points, to 20,582.08 while the Hang Seng index was 1.39 percent lower to 27,230.86, for a decline of nearly 400 points on the session.

The FTSE Straits Times Index, which began operation today with a slightly different configuration than the former Straits Times Index, was 1 percent lower to 3,311.07. Even though the new version of the index includes 30 rather than 47 components, which were chosen according to the percentage of shares available to the public and trade volumes, it started the day with the valuation of the old index at the end of Wednesday’s session.

Tokyo’s markets were also lower on the session, falling after Goldman Sachs issued a report on Wednesday predicting that the US is likely to fall into a recession and that, in fact, it could already be in one. In addition, a Goldman Sachs analyst in Tokyo said today that the declines in the US economy has resulted in a 50 percent probability that Japan’s economy will also suffer a recession. The Nikkei 225 was down 1.45 percent to 14,388.11, a decline of over 200 points on the session. The Topix index fell 1.61 percent to 1,401.36 while the Mothers market dropped 0.66 percent to 746.29. The real estate sector saw declines on analyst opinion that foreign investors could get out of the market this year. Sumitomo Realty and Development (TYO: 8830) was 5.3 percent lower to ¥2,480 while Mitsubishi Estate (TYO: 8802) was down 5.7 percent to ¥2,330. Mitsubishi UFJ (TYO: 8306; NYSE: MTU) was the biggest loser among banks, falling 2.2 percent to ¥1,024. Shares related to semiconductors saw gains after chip making equipment maker Tokyo Electron (TYO: 8035) said that orders were up by 16 percent more than it had anticipated last quarter. The news sent Tokyo Electron up 2.6 percent to ¥6,230. Among others in the sector, Advantest (TYO: 6857; NYSE: ATE) added 1.8 percent to ¥2,845 and NEC Electronics (TYO: 6701; NAS: NIPNY) gained 2.4 percent to ¥2,375.

European markets were also lower on the session, with the pan-European FTSE Eurofirst 300 falling 0.79 percent to 1,437.68. In Madrid the IBEX was 0.38 percent lower to 14,548.4 while the Paris CAC-40 was down 0.64 percent to 5,400.43 and the Dax dropped 0.89 percent to 7,713.09. The best performer on the Dax was retailer Metro (FWB: MEO), with a gain of 6.25 percent to €54.25, while construction group Vince (Euronext: DG) had the best day on the CAC-40 as it added 3.74 percent to €46.27. Carmakers saw gains on the day. Volkswagen (FWB: VOW; OTC: VLKAY) was up 0.35 percent to €149.06 and BMW (FWB: BMW) added 1.14 percent to €36.32 while Peugeot (Euronext: UG; OTC: PEUGY) was 1.73 percent higher to €46.96 and Renault (Euronext: RNO) gained 2.14 percent to €84.55. Utilities also advanced. Suez (Euronext: SZE; NYSE: SZE) was up 0.6 percent to €48.59 and Eon (FWB: EOA; LSE: EON; NYSE: EON) was 0.8 percent higher to €152.84. The steel sector declined, with ThyssenKrupp (FWB: TKA; LSE: THK) in the day’s worst performance on the Dax as it fell 4.94 percent to €35.46. Mittal Steel (Euronext: MT; NYSE: MT) dropped 3.04 percent to €45.27, while steel products manufacturer Vallourec (Euronext: VK) had the worst day on the CAC-40 with a decline of 5.3 percent to €155.04. Industrial gases groups were also lower. Air Liquide (Euronext: AI) fell 2.79 percent to €101.78 while Linde (FWB: LIN) dropped 2.98 percent to €93.13.

In London, the FTSE 100 was 0.8 percent lower to 6,222,7 while the FTSE 250 dropped 163 points, or 1.64 percent to 1,437.68. Retailers held the two top spots on the gainers side of the 100. Do-it-yourself retailer Kingfisher (LSE: KFG) added 3.73 percent to 119.6p while food retailer Sainsbury (LSE: SBRY) had the best day on the 100 with a gain of 6.3 percent to 388p. Aluminium can manufacturer Rexam (LSE: REX) added 3.65 percent to 383.5p. Over on the 250, gold miner Randgold (LSE: RRS; NAS: GOLD) was up 5.13 percent to £21.93. The best performance of the day on the 250 came from the oil and gas sector, where Wellstream (LSE: WSM) jumped 10.9 percent to £12.55. On the other hand, Tullow Oil (LSE: TLW; OTC: TUWLY) had the worst day on the 100 as it fell 5.34 percent to 594p. Over on the 250, the worst performance of the day came from food processor Premier Foods (LSE: PFD), which was down 13.15 percent to 163.5p. Other losers on the day came in the banking sector, where HBOS (LSE: HBOS) was 4.29 percent lower to 647p, and for pubs operator Whitbread (LSE: WTB) with a decline of 4.16 percent to £10.82.

Wall Street ended higher after Federal Reserve Chairman Ben Bernanke said that he is willing to cut interest rates again if it will help avoid a recession and on rumors that Bank of America (NYSE: BAC; TYO: 8648) will buy ailing mortgage lender Countrywide Financial (NYSE: CFC). The Dow Jones Industrial Average ended 0.92 percent higher to 12,853.09 while the Nasdaq Composite added 0.56 percent to 2,448.52 and the S&P 500 gained 1,420.33. The rumors about a Bank of America purchase of Countrywide Financial is seen as good news after recent talk that Countrywide could be near a bankruptcy filing. Bank of America added 56 cents on the session to $39.30 on the talk, while Countrywide jumped $2.63 to $7.75, a gain of 51.3 percent. Elsewhere in the financial services sector, however, Capital One Financial (NYSE: COF) dropped 43 cents to $42.92 after it said that it is making provision for $1.9 billion in losses for the fourth quarter. This is seen as a sign that the subprime crisis is affecting other parts of the credit markets. The airlines sector saw gains after a report from the Wall Street Journal’s online service reported that Delta Air Lines (NYSE: DAL) is close to beginning talks with Northwest Airlines (NYSE: NWA) and UAL Corporation (NAS: UAUA), the parent company of United Air Lines toward some sort of combination between them. Delta added $2.46 to $15.98 while Northwest was up $3.84 to $15.85 and UAL gained $6.16 to $32.19. UAL also received an upgrade to “overweight” from JP Morgan.