Asian stocks tumble on Bear Stearns news (Nikkei, Hang Seng hit hard)

AP ^ | 03/17/08 | KELLY OLSEN

[TigerLikesRooster]

Asian stocks tumble on Bear Stearns news

By KELLY OLSEN, AP Business Writer 39 minutes ago

Asian markets plunged and the dollar sank Monday after JPMorgan Chase said it would buy troubled U.S. investment bank Bear Stearns, signaling to investors the depths of the credit crisis.

Oil prices hit a record in Asian trading and U.S. stock index futures were down sharply, suggesting Wall Street would open lower Monday after sinking Friday. European shares also opened lower.

JPMorgan said Sunday it would acquire Bear Stearns for $236.2 million — or $2 a share — in a deal that represents a stunning collapse for one of the world's largest and most venerable investment banks.

The buyout was aimed at averting a bankruptcy and a spreading crisis of confidence in the global financial system sparked by problems in the U.S. subprime mortgage market.

But to Asian investors the move suggested that the credit woes are far from over — and fanned worries that other big American banks are facing serious troubles.

"There is persistent credit uncertainty. Market players have been repeatedly let down which shows the subprime mortgage problems are so deep-rooted," said Atsuji Ohara, global strategist of Shinko Securities in Tokyo.

"Just buying an investment bank does not solve the problem," he said. "Markets are prodding (the U.S. government) to inject public funds."

News of the acquisition of Bear Stearns stunned investors just before markets opened in Tokyo and Seoul. Both fell sharply before paring some losses in afternoon trading.

Japan's benchmark 225 index sank 3.7 percent to close at 11,787.51 points, its lowest in more than 2 1/2 years. Hong Kong's Hang Seng index fell 5.2 percent to finish at 21,084.61.

Across the Asia-Pacific region, all major stock indexes were down, including markets in Australia, China, South Korea, Indonesia and the Philippines. India's Sensex dropped 5.1 percent in afternoon trading.

European stocks fell in early trading. The U.K.'s benchmark FTSE 100 dipped 1.1 percent to 5,631.7 while France' CAC 40 slid 2.6 percent to 4,471.95. Germany's DAX slipped 0.75 percent.

"We are worried" about what comes next, Shim Jae-youb, a strategist at Meritz Securities in Seoul, said of concerns that other banks may collapse.

Shim said investors were on guard ahead of the release of quarterly earnings reports from big U.S. investment banks this week, including Lehman Brothers Holdings Inc., Goldman Sachs Group Inc., and Morgan Stanley. Bear Stearns had been scheduled to report its results Monday, though it wasn't clear if it would go ahead with that plan.

In an extraordinarily rare weekend move, the Federal Reserve took bold action Sunday evening by cutting the discount rate, its lending rate to financial institutions, to 3.25 percent from 3.5 percent, effective immediately. The Fed also created another lending facility for big investment banks to secure short-term loans that would be available to big Wall Street firms on Monday.

The Fed was also widely expected to again cut its headline interest rate, the fed funds rate, by as much as a full percentage point to 2 percent at a regular meeting set for Tuesday.

In currency trading, the dollar plunged as low as 95.72 yen — its lowest since August 1995 — dragged down by a gloomy outlook for the American economy and prospects for lower interest rates. The euro rose to a record high $1.5903.

Japanese officials quickly called for calm in the currency markets, but did not announce any plans for intervention to shore up the greenback by buying up dollars. The weak dollar erodes profits at the country's key exporters.

Oil prices, meanwhile, hit an all-time trading high in Asia as the greenback's tumble and the decline in stock markets prompted investors to seek shelter in commodities such as crude oil. Light, sweet crude for April delivery spiked to a record $111.80 a barrel in electronic trading on the New York Mercantile Exchange.

On Friday, U.S. stocks sank after the announcement of a Fed plan in conjunction with JPMorgan to alleviate the liquidity crisis at Bear Stearns touched off concerns about the severity of credit troubles in the world's largest economy. The Dow Jones industrial average fell 194.65, or 1.60 percent, to 11,951.09.

Wall Street appeared poised for another drop when trading resumed Monday morning. Dow index futures were down 164 points, or 1.4 percent, to 11,818, while the Standard & Poor's 500 index was down 21.7 points, or 1.65 percent, to 1,291.6.

Further slides in Asian markets are likely, said Ismael Cruz, the governor of the Philippine Association of Securities Brokers and Dealers, Inc.

"The outlook is very grim," he said.

[TigerLikesRooster]

Symbol	Name	Last Trade	Change	Related Info
^AORD	All Ordinaries	5,173.20 1:11AM ET	115.30 (2.18%)	Components, Chart, More
^SSEC	Shanghai Composite	3,820.05 3:00AM ET	142.62 (3.60%)	Chart, More
^HSI	Hang Seng	21,084.61 5:59AM ET	1,152.50 (5.18%)	Components, Chart, More
^BSESN	BSE 30	14,926.09 6:16AM ET	834.43 (5.29%)	Chart, More
^JKSE	Jakarta Composite	2,312.32 6:30AM ET	71.10 (2.98%)	Components, Chart, More
^KLSE	KLSE Composite	1,194.84 Mar 14	6.51 (0.54%)	Components, Chart, More
^N225	Nikkei 225	11,787.51 3:00AM ET	454.09 (3.71%)	Chart, More
^NZ50	NZSE 50	3,429.44 12:31AM ET	71.47 (2.04%)	Components, Chart, More
^STI	Straits Times	2,792.75 5:10AM ET	46.26 (1.63%)	Components, Chart, More
^KS11	Seoul Composite	1,574.44 5:03AM ET	25.82 (1.61%)	Components, Chart, More
^TWII	Taiwan Weighted	8,005.46 1:46AM ET	155.93 (1.91%)

[TigerLikesRooster]

Ping!

[bruinbirdman]

But the dollar is mostly dollars up.

yitbos

[bruinbirdman]

"JPMorgan said Sunday it would acquire Bear Stearns for $236.2 million — or $2 a share "

That would be about 115 million chares. Heck, Friday, BSC trading volume was almost 200 million shares between what $55 and $25. Someone got out at the right time.

yitbos

[CRBDeuce]

Closing price Fri..........$30

minus writedowns of....$28 that JPmorgan will take on

leaves a net Price =.......$2 equivalent.

The gov't is 'guaranteeing' a large piece of CDO/MBS future writedowns for JPM, tho'.

[bruinbirdman]

"The gov't is 'guaranteeing' a large piece of CDO/MBS future writedowns for JPM, tho'."

EUrotopia has no equivilent of The Fed. They are hurting more.

yitbos

[what's up]

DOW futures down only 1.9 percent?

Seems like it should be more with all this bad news.

[GovernmentShrinker]

The Asian markets actually remained pretty calm, all things considered. And so far, European markets are down even less than Asia. I won’t be surprised if the US markets stay pretty calm today, though bad news from Lehman could change that in a hurry, and also set off panic selling in Asia tonight. I think Bernanke & Co. did a good job averting the big one this time. Lots of problematic long term issues set in motion by these steps, but at least today’s fire got put out before it went out of control, and that buys some time to structure additional fixes that may have better long term prospects.

[palmer]

Been known for a while (a year or more).

[Lazamataz]

We are all in very serious trouble. Nobody will be able to afford a single slice of cheese.

Luckily, I still have a pistol and a bullet.

[RSmithOpt]

Smoke & mirrors, my FRiend...smoke & mirrors....the crap is still hitting the fan 'cause the net effect of the BS derivatives games, bond fraud, and our $9.5 trillion debt is coming home to roost in a big way...that is globally.

The DOW will be down another 2000 by the end of the summer.

All they are doing now is trying to control the glide angle for the crash landing.

Food and energy are going through the roof and the only countries that will not feel its immediate impact will be those countries running trade surpluses, but they too will be paying more.

[Lazamataz]

We're all gonna die!!!!

[cinives]

Huh ? Ever heard of the ECB ?

[jiggyboy]

And Lazmataz joins the Floor 80 club.

[Lazamataz]

It's over, baby.

Just load the gun and do the deed.

[RSmithOpt]

You bet...not all the stock in the world will keep any of us from making the final curtain call.

The money has been made and now others will be left holding the bag until the next cycle starts on the upside.

[ivyleaguebrat]

Unlike the Fed, the ECB generally doesn’t pretend it can ensure both stable prices and full employment.

The ECB considers its overriding purpose to be to keep inflation low and stable. Perhaps if the Fed had the same outlook, we wouldn’t be where we are.

[cinives]

That’s because the ECB does not have a fiscal policy unit, unlike the US.

We’d all be better off if the Fed did not exist at all.