HONG KONG — Stock markets in Asia opened sharply lower Tuesday after the steepest falls on Wall Street since the height of the global financial crisis in 2008, as investors fled assets they consider risky and turned to traditional havens like gold and U.S. Treasury securities.
The Nikkei 225 in Tokyo was down 4.2 percent at midmorning, while the Kospi in Seoul had lost 6.3 percent. Shares in Australia sank 4.2 percent, and early indicators suggested that other markets in Asia would follow suit when they opened later in the morning.
Gold continued to make gains, trading at $1,732.55 an ounce at midmorning, while U.S. Treasury yields sank, suggesting greater demand for the securities despite the recent downgrade by Standard & Poor’s of U.S. debt.
The sharp falls in Asia followed a remarkable day of trading on Wall Street, when U.S. stock markets resumed their free fall on mounting fears about the stalling economy and worries that the government had few options to increase growth, dual concerns that overshadowed the downgrade of long-term U.S. government debt.
The Dow Jones industrial average fell 634 points, or 5.6 percent, and the Standard & Poor’s 500-stock index dropped 6.7 percent, the biggest retreats since December 2008 in the midst of the financial crisis, accelerating a sell-off that began a couple of weeks ago. The S.& P. 500 is now down 18 percent from its April 29 peak and is nearing official bear market territory, defined as a fall of 20 percent.
Officials in Asia tried to soothe markets. Australia’s prime minister, Julia Gillard, told reporters, “We will continue to see economic growth,” according to Reuters.
“We should also get a degree of confidence from the strong fundamentals of our economy,” she said. Australia has been booming recently thanks to the strength of the Chinese economy, which imports massive amounts of iron ore, copper and other commodities to fuel its growth.
Graham Bowley contributed reporting from New York.
Source: nytimes.com