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Asian Stocks Tumble; Nikkei Falls 6.4%

Joseph Woelfel

Asian stocks declined Tuesday, with the market in Japan tumbling more than 6%, after Wall Street closed with big losses after traders learned the U.S. has been in a recession since December 2007.

Japan's benchmark Nikkei 225 stock average closed down 6.4% to 7,863.69.

Sentiment in Tokyo turned sluggish after the Dow Jones Industrial Average in the U.S. plummeted nearly 8% Monday with a litany of bad economic indicators.

Stocks in New York Monday plummeted after the National Bureau of Economic Research confirmed what many had suspected -- the U.S. has been in a recession for nearly a year. The session was marked by massive profit-taking following a five-day rally in the blue-chip indices.

The Dow plummeted 679.95 points, or 7.7%, to 8149.09, and the S&P 500 fell 80.03 points, or 8.9%, to 816.21. The Nasdaq sank 137.50, or 9%, to 1398.07.

Apart from fears over a prolonged global downturn, the Nikkei index plummeted on heavy selling of exporters on recent gains in the yen, which erodes overseas earnings. Japan's top automaker, Toyota(TM Quote), tumbled 4.1%, and Honda(HMC Quote) dropped 6.9%.

Sony(SNE Quote) fell 4.6%, while rival Panasonic(PC Quote) lost 3.3%.

The Hang Seng index in Hong Kong fell more than 5%, while the S&P/ASX 200 index in Australia dropped 4.2%. Australia's central bank slashed its key interest rate Monday a full percentage point to 4.25% as it tries to prevent the economy from contracting.

In Taiwan, markets were weighed down by a profit warning from Taiwan Semiconductor Manufacturing(TSM Quote), the world's largest chip contractor. Its shares tumbled 7%.

Stocks in Europe opened lower. The FTSE 100 index in London slid 1.4%, while the DAX in Frankfurt fell 1.1%.

Tesco, the U.K.'s biggest supermarket company, reported its weakest revenue growth in about 15 years, according to Bloomberg, after shoppers switched to discounters.

U.S. stock index futures were higher, suggesting stocks on Wall Street would bounce back Tuesday. S&P futures rose 4.60 points to 820.40, but were trading 75.07 points below fair value. Nasdaq futures rose 4.25 points to 1098.75, but were 87.12 points below fair value.