HSI Slides As Wall Street Plunge Hits Asian Markets

Hong Kong stocks suffered deep losses on Friday, in line with a worldwide sell-off as traders worry an extended rally fuelled by recovery hopes may have run too far, and as fears mount about a second wave of US virus infections.

The Hang Seng Index slipped 1.3 percent, to 24,162.

On the mainland, the Shanghai Composite Index clawed back a bit, but was still down 0.3 percent, to 2,909 and the Shenzhen Composite Index was also down 0.3 percent, to 1,860.

Tokyo went into the break 1.5 percent down Sydney was 1.7 percent down, Seoul, Singapore and Jakarta all dropped more than 2 percent and Taipei slipped 0.9 percent.

Still, the losses were shallower than earlier in the day and much lighter than on Wall Street, where all three main indexes were routed – the Dow collapsed 6.9 percent, the S&P 500 dived 5.9 percent and the Nasdaq tanked 5.3 percent from a record high.

The optimism on trading floors was shattered on Wednesday when Federal Reserve boss Jerome Powell signalled the world's top economy would take some time to bounce back from the crisis.

"Investors have been arguing in recent weeks that the stock market performance and economic reality have been disconnected, wondering when reality might hit the market," said JP Morgan Asset Management strategist Tai Hui.

"The fear of a rising rate of Covid-19 infections is the most important driver in our view for this sell-off."

The US dollar, under pressure for weeks owing to the huge Fed easing measures and the return of risk-taking, rallied as investors sought its safe-haven status. The greenback was up more than 1 percent against the Canadian, Australian and New Zealand dollars as well as Indonesia's rupiah.

It also jumped more than 2 percent against the Mexican peso and South African rand, though it weakened to the ultimate go-to unit in times of crisis, the Japanese yen.

"Who knows whether this is just the 'correction we had to have' or the start of something more serious," said National Australia Bank's Ray Attrill. (AFP)

______________________________