Asian stocks slump, pound slid on worries about UK economy

South Korea (AP/UNB) – Asian stock markets slumped on Wednesday while the British pound hit a new 31-year low. Investors worried about the effect of Britain’s decision to leave the European Union on the U.K. real estate market following the Bank of England governor’s remarks.KEEPING SCORE: Tokyo’s Nikkei 225 finished at 15,378.99, down 1.9 percent after slumping as much as 3 percent. South Korea’s Kospi lost 1.9 percent to 1,953.12. Hong Kong’s Hang Seng index slid 1.7 percent to 20,397.20. Australia’s S&P/ASX 200 was down 0.6 percent to 5,197.50. Stocks in mainland China and Thailand were flat while the key index in Taiwan fell.
UK WATCH: Concerns that the U.K.’s decision to leave the European Union might cause a steep slide in the British commercial real estate value and hurt the wider economy pushed the British pound sharply lower overnight. Mark Carney, the Bank of England governor, said that some of the risks to the economy predicted before the referendum had begun to crystalize, including the concern about the skyscrapers, shopping centers and other commercial real estate that have taken in capital from overseas and had become “stretched.” The Bank of England moved to reassure markets it would avoid a repeat of the 2007-08 financial crisis, freeing up more money for loans to business and households but it could not stop investors from selling the pound.
ANALYST’S QUOTE: “BOE governor Mark Carney, almost the only British leader who seems to not be resigning at the moment, emphasized the challenges the U.K. economy will suffer in the post-Brexit world,” said Angus Nicholson, a market analyst at IG in Melbourne, Australia. “Carney’s speech seems to have initiated the dawning of realization of the longer-term impact of Brexit for many in the markets.
CURRENCIES: The pound slowed its fall but still traded below $1.3 level for the first time in more than three decades. It was trading at $1.2922, down 0.3 percent from the previous close of $1.2962. The dollar weakened to 101.10 yen from 101.28 yen while the euro fell to $1.106 from $1.107.
WALL STREET: U.S. stocks closed lower on Tuesday a day after the Independence Day holiday. The Dow Jones industrial average fell 108.75 points, or 0.6 percent, to 17,840.62. The Standard & Poor’s 500 index slid 14.40 points, or 0.7 percent, to 2,088.55. The Nasdaq composite lost 39.67 points, or 0.8 percent, to 4,822.90.
OIL: The prices of oil stabilized after a sharp fall in the previous session. Benchmark U.S. crude gained 3 cents at $46.63 per barrel in New York. The contract sank $2.39, or 4.9 percent, to close at $46.60 a barrel on Tuesday. Brent crude, used to price international oils, fell 1 cent at $47.95 a barrel in London.