Friday, 10 October 2008

Freefall Friday: $84b - worst day in 21 years

ASX ... market plunges (Get Image)

The Australian share market has plunged in opening trade after a disastrous session overnight on Wall Street.

Shares have slumped more than 5 per cent in the first half hour of trade.

About 10:30am AEST, the All Ordinaries index was down 229 points to 4,062, the lowest level in nearly three and a half years.

The ASX 200 lost 222 points to 4,092.

Earlier today it was tipped the local market would follow the United States down as Wall Street hit a new five-year low.

This morning the Dow Jones Industrial Average finished down 678 points, closing under the 8,600 mark.

The last time it dropped below 9,000 was in August 2003.

The Nasdaq slumped more than 5 per cent and the S&P 500 retreated 7.5 per cent.

Overnight, the Australian futures market plunged with the Share Price Index 200 ending down 4.2 per cent.

The Australian dollar also dipped against the greenback this morning after it rose above 71 US cents overnight.

It is now buying about 68.2 US cents.

Updated: 5:00 (AEST)

Freefall Friday: -$84b - Worst day in 21 years

Australian shares had their worst day since the crash of 1987, losing more than 8%, as mounting recession fears sent equity markets tumbling around the world.

The benchmark S&P/ASX-200 stock index recorded its biggest one-day loss in its 16-year history, dragging the value of the main share index below $1 trillion. The broader All Ordinaries recorded its worst day since the October 1987 crash.

- ASX-200 loses 8.3%
- Stocks plummet 16% for the week, worst since 1987
- Value of ASX200 falls below $1 trillion
- More than $680 billion wiped out in past year

The S&P/ASX200 ended down 8.3%, or 360.2 points, to 3960.7. The All Ordinaries lost 8.2%, or 351.9 points, to 3939.4.

The indices, both of which ended on their lows for the day, are at their weakest since May 2005.

The ASX200 lost almost 16% for the week, about three times the amount it lost in the week after the September 11 attacks in 2001.

In a day of dramatic plunges, the index lost more than $80 billion off its value, sinking below the $1 trillion mark. It has fallen more than $650 billion from its peak on November 1, 2007.

Across the board plunge

All sectors in the index fell more than 5%, with the energy sub-index plunging the most, losing almost 12%, as the oil price plummeted.

Financial companies lost 8.6%.

BHP Billiton shaved the most off the index, falling $2.10, or 7%, to $27.74. Rio Tinto fell $5.01, or 6.4%, to $73.00. Fortescue Metals Group dived 62 cents, or 19%, to $2.68. Concerns that China's slowing economy will cut its demands for commodities, including iron ore, have battered mining companies in recent days.

Only one company rose - Babcock & Brown Capital, which gained 2 cents, or 0.9%, to $2.35.

NAB fell $2.93, or 12%, to $20.80. The Commonwealth Bank shed $2.85, or 6.7%, to $39.55, ANZ lost $1.35, or 8.1%, to $15.30, Westpac fell $1.31, or 6.1%, to $20.19. Macquarie Group lost $2.98, or 9.5%, to $28.52.

Today's drop in the sharemarket seems to be led by the Nikkei, which was down as much as 11% at one point, said 4Cast Ltd's Michael Turner.

"Everyone has followed the Nikkei down," he said. "Everyone is fearful at the moment."

"And they get their money out of equities first thing."

"There's a bit of a crash happening," he said. "A lot of people's faith is being shaken."


As Stocks Plummet Across the Globe, Bush to Host Emergency Finance Meeting at White House

In the largest loss since the crash of 1987, the Dow Jones Industrial Average fell over seven percent on Thursday, closing below 9,000 for the first time in five years. Over the past six trading days, the Dow has plummeted over 2,200 points, or about 21 percent. Earlier today, global stock values fell in trading as fears grow of a worldwide recession.

Economists predict unemployment rate rise
The unemployment rate has jumped from 4.1 per cent to 4.3 per cent.

Market plunges 5pc, dollar crashes
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.

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.

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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.

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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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