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Asian markets tumble following oil price surge

Asian markets tumble following oil price surge

Asian stocks tumbled yesterday after a breathtaking surge in oil prices and shock jump in U.S. unemployment sent Wall Street spinning and fanned fears of sharply slower economic growth.
Japanese shares slid just over two percent after a dizzying three-percent plunge in the U.S. Friday, when oil prices rocketed the most ever in a single day to close nearly US$11 up at record levels around US$139 per barrel.
"Asian markets are certainly in for a heavy pounding over the next few weeks," Andy Xie, a former Morgan Stanley economist now working independently from Shanghai, told Agence France-Presse.
Investors worry that sky-high crude oil costs will bleed money from consumers, squeeze business profits and force central banks to raise borrowing costs in a bid to tame inflation. That could hit economic growth even as the world economy struggles to recover from the default crisis among subprime - or riskier - U.S. mortgages, which according to the IMF threatens losses of nearly one trillion dollars.
"A lot of people were hopeful that the U.S. could avoid recession. What happened Friday dashed those hopes, which were pretty far-fetched, since a huge credit bubble has just burst," Xie said.
Elsewhere, Indonesia was around one percent down yesterday and Malaysia fell 1.5 percent. Both nations have sharply raised fuel prices recently as multi-billion-dollar official energy subsidies become unaffordable across Asia.
Oil prices eased back yesterday but were still at around US$137 in Asian trade as calls mounted for quick action to tame them.
Meanwhile, Lehman Brothers said in a statement Friday that a "cost-push inflation shock" had become its top for worry for Asia, which is also battling soaring food prices.
The investment bank said the longer the shock lasted, the more it would hurt economic growth, although many experts have yet to dramatically scale back predictions of reasonably robust Asian expansion this year. However, there are lingering fears that Asia remains export-dependent and could suffer as the U.S. economic slowdown curbs international shipments, including from China.
"One camp thinks the slowing U.S. economy will hit China's export engine, while another says China can weather the impact because of growing domestic consumption," said Peter Alexander, the founder of consultancy Z-Ben Advisors. "We're somewhere in the middle - we expect a slowdown but not a dramatic slide," the China-based expert told AFP.


Updated : 2021-05-08 10:42 GMT+08:00