Black Monday Hits Seoul Markets

Black Monday Hits Seoul Markets

By Cho Hyung-kwon

The Seoul stock market plummeted to its lowest level this year and the Korean won weakened to a four-month low as negative external factors weighed heavily on the local financial markets.

The Korea Composite Stock Price Index (KOSPI) tumbled 48.06 points, or 5.73 percent, to close at 790.68, the lowest since Dec. 26 last year. The 48-point decline is the ninth largest ever on the Seoul stock market.

The technology-heavy Kosdaq also finished at its lowest for the year, slumping 28.84 points, or 6.61 percent, to 407.41.

The won-dollar exchange rate shot above 1,180 won level in the morning and peaked at 1,187 won, the highest since Jan. 20, before closing at 1,183.1 won. The won lost more than 1 percent against the U.S. dollar.

The benchmark stock index plunged more than 65 points in the afternoon before recovering some of the lost ground from retail buying.

``Possible interest rate hikes in the U.S. in June, concerns over the spread of terrorist attacks and rising oil prices dampened the already weak investor sentiment,¡¯¡¯ Daishin Securities said....>>

http://times.hankooki.com/lpage/biz/200405/kt2004051016362211870.htm

... the Japanese markets.

Something is going on, but I'm not sure what. The fear is out there, though. If consumer spending is going down in both Asia and the U.S., no amount of monetary management will help the downturn.

Oil prices soaring, and announcements that interest rates in the U.S. will probably rise soon.

... and that's also a factor in how much money ordinary people can spend on products and services. But, I don't believe the rumors about interest rates rising--historically, at least since Greenspin has been head of the Fed, the rates go up when Democrats are in office, and go down when Repugs are running the government. Rates going up will help stall what little job growth has occurred, mostly because business credit lines are maxed out, too.

The Fed's been quietly pumping lots of money into the economy, in part to prop up the housing industry through mortgage money, and the usual expectation is that interest rates have to rise to counter the inevitable inflation such causes, but, that's not going to happen until after the election.

But, I think the key to what will happen soon is to look at bond futures near the time of the election. If they suddenly start soaring, get ready for higher rates. But, not this summer. Too much at stake for the Repugs--they've been staving off the inevitable for a long time--I expect them to continue to do so until November.

Cheers.

they could open the spigot a little more thereby bringing down oil prices.
with oil prices so high -- people may forget that the saudi's promised g.w. that they would produse more oil before the 04 election. it could happen any time now.

It is the U.S. companies who are saying that the higher prices are simply insurance against future shortages due to unforseen problems with supplies in the Middle East or elsewhere. But there is no shortage of oil right now.

...trumpet the record profits by the sOil companies.

Where is the money going? CEOs and the top 1%- where else?

<http://www.google.com/search?hl=en&ie=UTF-8&oe=UTF-8&q=headlines+gas+profits&btnG=Google+Search>

... that the Saudi princes have been living far beyond their means for quite a while, and for that reason, their fortunes are declining. High oil prices mean they can continue that high living. If the Saudis do increase production, it will probably be later than sooner. If they don't time it just right, there won't be a significant enough drop before the election for it to matter.

I also think that the oil industry will use the current chaos to establish a new shelf for oil prices. This happened after the 1973 slowdown, the 1978 embargo and the Gulf War. Oil companies are recording record profits, and their influence cannot be discounted--the Saudis are just a small part of the overall industry. It's not just a matter of principle that Cheney's energy task force papers haven't been released....

Birth rates have been high, and the Saudi people are not doing as well economically as they once did.

and would most probably burst the housing bubble created by cheapo interests/mortgages/refinancing. It will also raise interest rates on credit cards and the likes.

The FED well knows that the longer they feed the bubble the harder the crash will. But they also now that the economic "recovery" is still so fragile that rising rates right know may throttle it. And, of course, there's the election.

This uncertain situation is reflected by the markets.

Another analysis on the losses in Asia and on European markets:

Rate fears batter global markets
Fears that the US Federal Reserve will brake economic growth by raising interest rates are weighing upon stock markets around the world.
Investors said that the high price of crude oil and continuing instability in Iraq have also soured the mood.

The UK's benchmark FTSE 100 index shed 1.6%, while France's Cac 40 lost 1.9% and Germany's Dax declined 2.5%.

Earlier, Asian shares also fell sharply, with Japan's Nikkei index closing almost 5% lower

SNIP
http://news.bbc.co.uk/2/hi/business/3699975.stm

... I disagree with your assessment of the Fed's interest rate policy. The Fed is between a rock and a very hard place. Interest rates have been in the basement, at 40 years lows, for 3 years. They have been pumping money into the economy at an unprecedented rate with little effect. But the Fed knows that inflation is already happening and it will happen with a vengeance once the economy actually starts recovering. (Funny how the CPI numbers have been cooked of late to make it look like there is no inflation. There is PLENTY of inflation already, you don't raise energy prices this much without affecting almost everything you buy).

The kind of inflation that will erupt if the Fed doesn't raise rates will be disastrous for the economy. Raising rates too fast will also be disastrous. Just like the fabled "soft landing", the "easy takeoff" will be near impossible to achieve.

All IMHO :)

interest rate hikes in the US. It is all over the news there (well, at least on the internet).

Link: http://finance.yahoo.com/m2?u

This is NOT GOOD!!!

:scared:

Very scary.

has asked opec to increase production.
are we beginning to see the promise made to bush being kept?