Asian Stocks Sink after Dow Plunges

This is very dangerous. While the attention is on the primaries, we are seeing a crisis in the markets. We need to worry:

Asian markets plunged Wednesday after a steep drop on Wall Street overnight fanned investors' fears the U.S. economy was sliding into a recession that would sap demand for Asian exports.

n Hong Kong, the benchmark index plunged more than 6 percent in morning trading, while Japan's Nikkei 225 index sank more than 4 percent.

"It's unbridled pessimism," said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. "Everyone is concentrating on U.S. recession, but Europe is also looking bad. ... We are in for a bear market now."

Economic data Tuesday showing the U.S. service sector shrank last month for the first time since March 2003 wiped out nascent optimism about the American economy that had lifted global markets last week.

The news sent the Dow Jones industrial average plunging 370 points, or 2.93 percent, its largest one-day percentage drop since Feb. 27, 2007.

Asian markets have dropped sharply from the beginning of the year amid worries about a U.S. — and global — slowdown. Many stocks rebounded some over the last two weeks after the U.S. Federal Reserve made two big interest rate cuts to shore up the weakening American economy.

But pessimism returned after the Institute for Supply Management reported Tuesday that its index of activity in the U.S. service sector, which accounts for about two-thirds of the economy there, dropped below 50, indicating contraction. It was the first time the service sector reading has contracted since March 2003.