AUSTRALIAN shares have been hammered in trading today, wiping around $40 billion off the share market after the doom and gloom on Wall St continued overnight.
At 12pm (AEST), the benchmark S&P/ASX200 was 166.8 points or 3.53 per cent lower at 4555.4, while the broader All Ordinaries fell 166.6 points, or 3.49 per cent, to 4603.1.
The finance sector led the way down, with banking stocks suffering the biggest losses.
Commonwealth Bank shed $1.48, or 3.60 per cent, to $39.62, National Australia Bank dropped $1.46, or 7.05 per cent, to $19.24, while ANZ declined 60 cents, or 3.75 per cent, to $15.40.
Westpac slumped $1.03 cents, or 4.48 per cent, to $21.98 and its takeover target St George Bank sank $1.39, or 4.61 per cent, to $28.76.
Macquarie Group shares dropped dramatically, losing $5.73, or 16.89 per cent, to $28.20. Since August 12, Macquarie shares (mqg.ASX:Quote,News) have dropped 49.6 per cent, from $55.21.
Babcock & Brown fell 19 cents, or 20.65 per cent, to 73 cents. US stocks took another battering overnight, falling to a three-year low on concerns the wave of billion-dollar banking collapses is not over yet.
Turmoil sparks gold rush
Shares in Australia`s largest gold miners offered the only green amongst a sea of red, after the price of the precious metal recorded its biggest one-day gain in nine years amid uncertainty in equity markets.
At 12.23pm (AEST), spot gold in Sydney was trading at $US872.30 an ounce, up $US89 on yesterday`s close of $US783.30.
In the gold sector, Newcrest Mining rose $2.41, or 11.27 per cent, to $23.80, Lihir Gold gained 30 cents, or 14.02 per cent to $2.44, and Sino Gold Mining lifted 70 cents, or 19.72 per cent, to $4.25.
AIG rescue fails to calm
Yesterday`s $US85 billion ($107 billion) rescue of insurer AIG by the Federal Reserve failed to calm a crisis of confidence. Fears linger that Morgan Stanley - one of only two big investment banks left standing - may be next in line for a merger.
The Dow fell almost 450 points and the Nasdaq fell nearly 5 per cent in its worst day since the aftermath of the September 11 attacks in 2001 as rattled investors worried about who could be the next victim of the global credit crisis. There were similar falls on Monday night after the collapse of Lehman Brothers.
There were also heavy losses on the London, Paris and Frankfurt markets.
Who`s next?
Morgan Stanley shares sank 24.2 per cent overnight to $US21.75 as investors worried whether it would survive as an independent investment bank in the current environment.
Shares of the other remaining major US investment bank, Goldman Sachs, dropped 13.9 per cent to $US114.50 and at one point fell below $100 for the first time in more than three years.
"The fear is, `Who is next?`" said John O`Brien, senior vice president at MKM Partners. "It almost feels like people scour the books and say, `Who is the next likely target that we can put a short on?` and that spreads continuous fear."
Trouble spreads to Britain
The UK`s biggest mortgage lender, HBOS reached a merger deal with its rival Lloyds TSB, British media reported after lender`s shares plummeted for a third day running.
HBOS - the owner of BankWest - confirmed it was in "advanced talks" with Lloyds TSB, and the BBC and Sky News later reported that a deal had been struck, saying an announcement was expected early tomorrow.
Prior to the reports of the takeover talks, HBOS shares had nosedived 52 per cent to a low of 88 pence, its third successive day of heavy losses.
London`s FTSE 100 index tumbled 2.25 per cent to 4912.40 points, breaching key technical support at 5000 points as investors tracked Wall Street`s heavy losses.
In Paris, the CAC 40 lost 2.14 per cent to 4000.11 points and in Frankfurt, the DAX was down 1.75 per cent at 5860.98 points.
The Dow Jones industrial average fell 449.36 points, or 4.06 per cent, to 10,609.66, its lowest level since November 2005. It was the blue-chip Dow average`s biggest percentage drop since Monday, when it fell 504.48 points, or 4.42 per cent, the most since the aftermath of 9/11.
The S&P 500 fell 57.20 points, or 4.71 per cent, to 1,156.39, its lowest level since May 2005 and its biggest percentage drop since September 17, 2001, when the markets reopened after the September 11 attacks.
The Nasdaq also fell the most since September 17, 2001. It shed 109.05 points, or 4.94 per cent, to 2,098.85, its lowest level since August 2006.
Scarlet (Comment 127), the best way to cause those banks to fail is to panic such that everyone is withdrawing their cash. Try that..
Posted by: Warren Buffet 3:14pm today
If you were going to retire, and now cannot because of the hit your super has taken in the sharemarket, you can still get your hands on some cash, if you own one or two investment properties. Perhaps sell one or more. This is already happening in my neighbourhood, where quite a few people some years ago bought a house to live in ,as well as one or moreinvestment properties, and some are selling. There's little point hanging in there waiting for the next property boom when you are 65..
Posted by: rob of brisbane 3:09pm today
So the USA are printing money at top speed, and reducing their tax income via the Mortgage Debt Relief Act, and rampant corporate bankrupcies that are about to domino. Considering they produce little, and GM/Ford will be asking for bailouts shortly, hyperInflation or monumental taxation on US citizens isn't too far away. End result, USA consumption will evaporate, with the rest of the OECD not too far behind (except France) due to levels of debt. Don't believe me? It's already happening - look at new car sales in Oz, one of the hallmark measures of prosperity. If Asian countries don't lift consumption of their own products at a massive rate, global recession or depression will be the outcome - and if that comes to pass, you won't be worried about the value of your house ... you'll be worried about where your next meal is coming from.
Posted by: Always look on the bright side of life 3:06pm today
House prices haven't fallen at all. well at not least any of the houses that I own, although I wouldn't mind if the council had valued them a little cheaper. According to my latest rate notices most have risen between 50k to 75k in the last financial year and councils generally value the property on the cheap side, and judging by the home that have been seeling around them I'd say that most have risen at least 45K in the last 12 months.
We welcome your comments on this story. Comments are submitted for possible publication on the condition that they may be edited. Please provide your full name. We also require a working email address - not for publication, but for verification. The location field is optional.Read our publication guidelines.
Submit your feedback here:
Search for more stories on this topic on Newstext, our news archive service. Click here
