The September 11th attack
Asia anxious for Wall Street response
Associated Press
HONG KONG — Red ink flowed through Asian stock markets early today as fears of a prolonged war on terrorism by the United States heightened the anxiety of traders awaiting Wall Street's response to the terror attacks that kept U.S. exchanges closed for four days.
"In uncertain times, all markets tend to react on the negative side," said Paul Xiradis, equities director at Ausbil Dexia in Sydney, Australia, where the blue chips were down by 2.9 percent partly through the session.
"We saw that expressed in the European markets on Friday night where we saw hefty moves on the negative side," Xiradis said.
In Tokyo, the 225-issue Nikkei Stock Average was off by 5 percent at its close today, down 504.48 points at 9,504.41.
Prices tumbled by 4.7 percent in early Singapore dealings, with losses of more than 4 percent in the Taipei and Wellington markets as well. Seoul shares were off by 2.8 percent, and the South Korean government said it would ease the regulations on companies buying back their own shares.
"This is ugly," said David Kim, general manager of international business at Seoul Securities.
The New York Stock Exchange was set to reopen today after being shut by the attacks last Tuesday on the World Trade Center and the Pentagon, and Asian traders had to make their bets beforehand, because New York markets don't open until well after the Asian exchanges close.
There is much speculation that the United States will soon retaliate, perhaps against targets in Afghanistan, where the man identified by Washington as a prime suspect in the attacks, alleged terrorist mastermind Osama bin Laden, has been based for several years.
In neighboring Pakistan, the authorities decided to shut down stock exchanges in Karachi, Lahore and Islamabad from today through Wednesday.
Many traders expect the U.S. Federal Reserve to try to cushion any blows by a quick cut in interest rates.
But with New York closed, markets have been languishing in uncertainty elsewhere around the world.
Some experts believe the economic fallout from the terror attacks will seriously aggravate the global slowdown, although it is impossible to say just how bad the effects will be.
Some analysts said traders might refrain from making any major moves, mindful that thousands of people are believed dead.
However, many investors, worried about the future of the market, the economy and the country, probably want to adjust their portfolios.
Federal regulators, cognizant of the anxiety, announced steps late last week aimed at stabilizing the market.
"The fear factor right now is extremely high. Many people are of a mind to just get out of the market while they can," said Alan Ackerman, executive vice president of Fahnestock & Co. "Conversely, professionals and experienced investors know that patience pays off. So, hopefully the fear factor could be somewhat limited."
Arthur Hogan, chief market analyst at Jefferies & Co.
Hogan said he doubts there will be a selling frenzy, calling it inappropriate in light of the tragedy.
"Everyone is going to sort of keep their head down, be careful and not make big bets," Hogan said.
He also said that with the market having been closed since last Monday, investors might be less likely to make emotional decisions.
"There has been time to let calmer heads prevail," Hogan said. "We are going to get back to business as usual to the best we can, and I think that will sort of put a floor in the marketplace."
Some companies already have announced plans to buy back their stock, including Cisco Systems, which said Thursday it will repurchase up to $3 billion worth during the next two years.
History also seems to be on the side of the market.
While the Dow typically dropped about 2 percent in the first session and first week following major tragedies in the past — from the bombing of the USS Maine in 1898 to the 1993 bombing of the World Trade Center — it turned higher in subsequent months and years, according to Markethistory.com, an Internet firm that sells market research to institutional investors.
The stock market, with trading last Monday only, ended this past week mixed.
The Dow was essentially unchanged last Monday when it slipped 0.34 percent to 9,605.51. But the Nasdaq composite index rose 7.68 to 1,695.38, a gain of nearly 0.5 percent.
The Standard & Poor's 500 index fell 20.62, or 1.9 percent, to 1,085.78.
The Russell 2000 Index, the barometer of smaller company stocks, fell 4.46, or 1.0 percent, to 440.73.
The Wilshire Associates Equity Index, the market value of New York Stock Exchange, American Stock Exchange and Nasdaq issues, as $10.10 trillion last Monday, up $37.96 billion from Friday, Sept. 7. A year ago the index was nearly $14 trillion.
