Wednesday, 8 October 2008

Market plunges 5pc, dollar crashes

Australian shares closed down 5 per cent amidst global economic panic.

The Australian share market plunged 5 per cent today, as the dollar hit a new five-year low.

Fear of a global recession has seized markets, with big falls across the major indices overnight.

The Dow Jones Industrial Average plunged 5 per cent and today the local All Ordinaries index fell by the same margin. It was down 228.1 points at 4369.8.

After hitting a fresh three-year low, the ASX 200 closed 231 points lower at 4,388.

CommSec's Savanth Sebastian says there are growing concerns about the ability of emerging economies to withstand the financial crisis.

The fact that we saw the Indonesian market fall over 10 per cent and actually close trading for the day really had a significant impact on the rest of Asia," he said.

The miners have been hard hit, with Fortescue Metals Group down more than 14-per-cent.

The local currency, meanwhile, has dived more than three US cents in less than an hour to a five-year low.

About 4:45pm AEDT it was buying 67.65 US cents.

Asian markets suffer

Stocks around Asia have also suffered sharp falls.

Japanese share prices plunged 9.38 per cent, the biggest loss since the 1987 "Black Monday" crash, as panic-selling erupted over the global financial crisis.

Markets in Hong Kong, Singapore and South Korea were all down by about 5 per cent.

In Indonesia, a 10 per cent fall in share prices prompted officials to suspend market trading.

The main index in South-East Asia's largest economy nose-dived in response to sharp falls on Wall Street overnight before trading was suspended for an "indefinite period".

Indonesia's stock market was never suspended during 1997's Asian financial crisis.


European, Asian Markets Plunge as Recession Fears Spread Worldwide

As stock indexes plunge across Europe and Asia, Britain unveiled plans today to inject up to 50 billion pounds—close to $90 billion—into its biggest retail banks. Recent efforts to bolster world credit markets have failed to stem fears that the spreading financial crisis could lead to a global recession. We go to Rome to speak economist Loretta Napoleoni, author of Rogue Economics: Capitalism’s New Reality.

Associate Pofesor Steven Keen.
Steven Keen has come increasingly to prominence over the past couple of years specialising in the economics of Australia's spiralling household debt burden.

PROFESSOR STEVEN KEEN: Best case scenario is a recession more severe than 1990 and lasting one and a half times as long.

Worst case is something up to the level of the Great Depression which was 20 per cent unemployment and lasting up to a decade.

$50b Aussie wipe-out
Australian stocks wiped more than $50 billion off the value of the market today after the US House of Representatives rejected a $US700 billion ($860 billion) plan to rescue the financial system.

Upwardly immobile: mortgage stress bites
Reserve Bank statistics do not begin to tell the real story of housing stress in Sydney's western suburbs, according to financial counsellor Mike Young.

Households give up three years of gains
AUSTRALIAN households have been hit so hard this year that their financial gains of the past three years have been wiped out, a Reserve Bank report has found.

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