Huge volatility in Asian markets Australian market recovers some ground

Asian stocks booked some very large losses, extending a two- week rout that has erased $7.8 trillion in global equity values and commodities fell, with oil tumbling below $80 a barrel, on concern the loss of the U.S.’s AAA rating will exacerbate a slowing global recovery. Treasuries, the yen and gold climbed.The MSCI Asia Pacific Index slumped 3.9% by noon in Tokyo.

Almost 20 shares slid for each one that gained on the MSCI Asia Pacific Index, which was set for its longest losing streak since May 2010. The S&P 500 sank 6.7% yesterday to the lowest level since Sept. 10 and the MSCI All-Country World Index fell 5.1%, a ninth day of declines.

Japan’s Nikkei 225 Stock Average slumped 3.3% and Australia’s S&P/ASX 200 Index lost 2.1% but reversed late in the session to pare most losses. South Korea’s Kospi Index plunged as much as 9.9% at one stage and Taiwan’s Taiex Index tumbled 5.4% earlier, driving both gauges down more than 20% from recent highs, the level some investors consider a so-called bear market. Malaysia’s benchmark stock index lost as much as 4.9%, entering a so-called correction after sliding 10% from its record high.

In economic news, consumer prices in China climbed to 6.5% in July from a year earlier, the National Bureau of Statistics said today. The number was slightly ahead of market estimates but not enough to cause panic across markets. Inflation should moderate over the second half of this year as energy prices fall. 

In energy markets, oil for September delivery fell 4.6% to US$77.59 a barrel on NYMEX, the lowest level in more than 10 months. The two-day plunge in futures will be the steepest back-to-back loss since January 2009. An Energy Department report tomorrow should show crude inventories climbed for a third week. Brent crude oil plunged as much as 4.8% to US$98.74 a barrel, sliding below the US$100 mark for the first time since early February.