BANGKOK (AP) ? Asian stocks faced sharp losses early Friday following a precipitous session of trading of Wall Street sparked by fears that a global recession may already be under way.
Hong Kong's Hang Seng index fell 2.3 percent to 17,493.07, a day after tumbling nearly 5 percent. South Korea's Kospi plunged 4.8 percent at 1,713.56.
Australia's S&P ASX 200 fell 1.4 percent to 3,909.5. Markets in Japan were closed for a public holiday.
Investors headed for the exits Thursday as they gave in to fears that a global recession was already under way. Selling started in Asia, picked up speed in Europe and sent Wall Street near its worst finish of the year.
The Dow Jones industrial average fell 3.5 percent to close at 10,733.83. It was the second consecutive rout in the stock market since Wednesday afternoon, when the Federal Reserve announced a change in strategy for fighting the economic slowdown ? a bid to lower long-term interest rates and get people and companies to spend more money.
The Standard & Poor's 500 index, a broader measure of the stock market, and the Nasdaq composite, which is more heavily weighted with technology stocks, both fell more than 3 percent for the day.
Economic news was bad around the world. A closely watched survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies.
Volatility has been exacerbated by investors who find themselves outside their "comfort zones," according to Sean Darby, equity strategist at Jeffries Hong Kong Ltd.
"The low incidence of sovereign defaults and banking crises until 2008 created a false sense of security amongst investors that this was the 'norm'. In reality, the global economy tends to experience long periods where countries are in default," Darby wrote in a report.
The Fed announced Wednesday that it would shuffle $400 billion of its own holdings in hopes of reducing interest rates on long-term loans, a plan known as Operation Twist. The central bank hopes that if people and businesses are able to borrow money more cheaply, they will spend throughout the economy and give it a lift.
Still, the Fed announcement troubled investors because it came with a bleak assessment of the future. The Fed said it sees "significant downside risks to the economic outlook," including volatility in overseas markets.
Asian stocks were hammered to start the world's trading. The Nikkei index in Japan fell 2.1 percent. The main stock averages fell 2.8 percent in China, 2.9 percent in South Korea, 2.6 percent in Australia and almost 5 percent in Hong Kong.
Europe fared even worse. The stock market fell 5.3 percent in France, 5 percent in Germany and 4.7 percent in Britain.
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