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Stocks, Euro Plunge on Concern Austerity Plans to Curb Recovery
Will McSheehy and Shani Raja
May 17, 2010
Asian stocks fell the most in almost six months, led by the Shanghai Composite Index’s 5 percent plunge, the euro dropped to its lowest against the dollar since 2006 and the cost of insuring bonds from default jumped on concern European austerity measures will derail the recovery.
The MSCI Asia Pacific Index tumbled 2.8 percent to 116.65 at 4:12 p.m. in Tokyo. The Stoxx Europe 600 decreased 0.6 percent to 246.87. Standard & Poor’s 500 Index futures declined 0.7 percent. The euro fell as much as 0.7 percent against the dollar to as low as $1.2235. The British pound lost 0.8 percent versus the U.S. currency. The Markit iTraxx Asia index of credit-default swaps climbed 11 basis points to 131 basis points and oil lost 2 percent.
“Europe is certainly the scary story at the moment,” said Jason Teh, who helps manage $2.6 billion at Investors Mutual in Sydney. “Corporate debt risk was the 2008 story, now its sovereign debt risk. The countries that can print money may have to do it again to keep their economies afloat.”
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