It was a day for unwanted comparisons in Asian markets yesterday.
The Australian market hit its lowest point in almost two years and the main Asian benchmark, the MSCI Asia Pacific Index hit its lowest point since November 2006.
The MSCI Asia Pacific Index fell 2% to the lowest level since November 21, 2006 and is now firmly in bear territory, being off 24% since its peak on November 1 2007.
Japan's Nikkei had a bad day, falling 2.4% to 13,046.08, the most since April 14. South Korea's Kospi Index plunged 3.1%, the biggest decline since February. Hong Kong's Hang Seng Index slumped 3.4%
No one factor stood out except the sharp falls for Fannie Mae and Freddie Mac in the US. There were estimates that the two quasi-US Government controlled mortgage insurers would need another $US75 billion in capital. With bills in the US Congress giving both groups a major role in helping to try to stem the flood of mortgage failures in the US, the forecasted new capital needs hit market confidence.
The US Senate could vote on one bill tonight, just in time for the election campaign. It has to be resolved with the US House of Representatives where a similar bill was passed.
US analysts say it will be hard for both to raise fresh capital from the market, especially in that quantity. Both have already raised around $US20 billion in the past year.
The news knocked confidence in financial shares in Australia and Asia.
That saw the ASX 200 lose 69.6 points or 1.4%, to 4,932.9, its lowest since August 2, 2006. The index has lost more than a quarter of its value since reaching an all- time high on November 1, 2007.
Australian financial shares fell more than 2% yesterday while Australia's business confidence index dropped to minus 9 points from minus 4 in May, the lowest since September 2001.
Companies reported (See above story) rising costs, falling sales and solid wage rises.
The ANZ fell 60 cents to $18.60, the NAB 72 cents to $26.35, Westpac dropped 48 cents to $19.52 and Commonwealth Bank lost 72 cents to $40.73.
The big miners were mixed, with Rio Tinto gaining 20 cents to $123.45 and BHP Billiton losing 25 cents to $39.50.
Struggling fund manager Allco Finance Group gained 1.5 cents to 36 cents after the company took another step on the road to recovery, with the sale of Singaporean real estate assets for $138 million. Allco said it generated a $90 profit on the deal.
The media sector was mixed, with Fairfax rising 6 cents to $2.85, Consolidated Media Holdings 2 cents to $3.19, but News Corp lost 26 cents to $15.34 and its non-voting shares fell 25 cents to $15.08.
Retailers were mixed, with Harvey Norman rising 4 cents to $3.11, Woolworths gaining 37 cents to $24.40. But David Jones shed 11 cents to $2.91 and Wesfarmers l2 cents to $34.23.
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