Asian stock prices fell this morning, just as they did yesterday on Wall Street, as investors fear a recession in the U.S. economy if Washington does not soon find a solution to the budgetary issues.
On the Tokyo Stock Exchange, the Nikkei index was down 0.9 percent at 7:30 AM, marking the fifth consecutive day of decline.
Stock prices in Shanghai, Singapore, Hong Kong, Australia, and South Korea fell between 0.2 and 0.7 percent, leading the MSCI Asia-Pacific index, excluding Japan, to be down 0.2 percent at 7:30 AM, after plummeting 1.3 percent yesterday.
The drop in stock prices is a result of poor sentiment on Wall Street, where indices fell more than 1 percent for the second consecutive day, as investors fear that the U.S. Congress, due to opposing views of Republicans and Democrats on taxes, will not resolve the ‘fiscal cliff’ issue in less than two months.
This automatic reduction in budget expenditures and increase in tax burden at the beginning of next year, amounting to $600 billion, could trigger a recession in the U.S. economy, further slowing the already anemic growth of other major world economies.
– After the presidential elections in the U.S., the danger of the ‘fiscal cliff’ and deepening recession in the eurozone has again come into focus for investors – says Kim Soon-young, an analyst at IBK Securities.
Yesterday, it was reported that German exports fell last month at the highest rate since the end of last year, indicating that the debt crisis in the eurozone is increasingly pressuring the largest European economy.
There are currently no new economic stimuli from the European Central Bank. As expected, the ECB kept key interest rates unchanged at record low levels yesterday, and its president Mario Draghi did not appear optimistic about the economic situation in the eurozone, stating that the ECB is ready to start a new round of government bond purchases.
