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London
22 December 2008
World markets are mostly lower in light pre-Christmas trade.
Signaling the depth of the problems in the global economy, Japan's giant automaker Toyota forecasts it will likely conclude its fiscal year ending in March in the red.
David Bailey is a car industry expert at Britain's Birmingham Business School. He says if Toyota is having a tough time right now, so to is the rest of the auto industry.
"This is an unprecedented situation. Toyota has never made a loss before in its 71-year history. It is probably the most efficient car manufacturer in the world and for it to be making a loss indicates the size of the problem," he said.
That annual operating loss is expected to be around one-and-two-thirds-billion dollars. Bailey says a stronger yen, a lower demand for cars right now and tighter financing are all working against the automakers.
"When you buy a car, you buy a complex packet: a physical asset as well as a finance deal and a servicing deal. If you cannot get the finance, you cannot buy the cars," he added.
Despite the bad automotive news, Tokyo bucked the downward trend in Asia where the Nikkei gained 1.6 percent. Interest there seemed at least partially focused on the U.S. auto industry bailout and another interest rate cut by Japan's central bank last Friday also helped steady shares.
Elsewhere, the picture was less rosy. Hong Kong's Hang Seng index dropped 3.3 percent for the day.
In Europe, worries are again keeping market sentiments subdued and trade is in a narrow range.
Investors keep looking for a turnaround, but it is nowhere to be found.
Manufacturing activity in the 15-nation euro-zone showed a sharp fall in October, which is being viewed as yet another sign that the recession in Europe is deepening.
And the weekend announcement that Ireland will take stakes in its three main banks further underlined the seriousness of this growing, worldwide financial crisis.
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