Asian equities nosedive as investors fear the worse is yet to come

Major indices back on losing track as initial gains in the week get eroded

Asian equity markets plummeted sharply today as investors feared that the worst is yet to come for the global equity markets following a more than 700 points slide on the wall street yesterday. The massive collapse in the US equity markets, which came on the back of signs that the world’s largest economy deteriorated throughout the last month, spread the worries around that the last week’s hammering might not be the end of the tough times for the global equities. The current slide meant that all of the indices have lost out an opportunity to build up on the gains recorded at the start of the current week.

The US Federal Reserve said in its Beige book yesterday that "Economic activity weakened in September across all 12 Federal Reserve districts,” The report is published two weeks before officials meet to set interest rates. "Consumer spending decreased in most districts, with declines reported in retailing, auto sales and tourism.", the Fed noted further.

With the economy weakening under the effect of the yearlong financial crisis and housing recession, and with consumer prices easing, most investors anticipate the Fed will lower interest rates by a quarter of a point Oct. 29, following up on an emergency rate cut a week ago.

However, the prospects of weakening interest rates are failing to calm the fretted nerves around the globe as the equity market investors are unwilling to enter in the markets given that the secular, synchronized run in the world equities seems to have ended to give way for a period of prolonged stress amid shrinking global economic activity.

In the major news today, UBS AG, Switzerland's biggest bank, was forced into a $59.2 billion government bailout after piling up the biggest losses of any European lender from the global credit crisis. UBS will get a 6 billion Swiss francs capital injection from the government to help it set up a fund for as much as $60 billion of toxic assets that will be supported by the central bank.

All Asian equities were hammered with Japanese stocks getting thrashed as the Nikkei 225 Average plummeted by more than 11% for its worst single-day performance in more than two decades. The Kospi index plummeted 9.4% while the Chinese markets dropped more than 4%. The indices also faced a similar pounding with BSESENSEX ending down 2.11%, Jakarta Composite losing 3.76 and the Philippines stock exchange plunging 5.18%.