Friday, August 5, 2011

Australian shares and dollar slide on fears of another GFC

From The Sydney Morning Hearld:

A sea of red on financial markets wiped as much as $60 billion off the sharemarket as fears of another global financial crisis spooked investors.

The Australian dollar lost its haven status, heading for its worst week since May 2010 when fears of European sovereign debt default first emerged. It's lost about six US cents in a week, falling to as low as US1.0425 earlier today.

The Reserve Bank added to the gloom, cutting its growth forecast for the economy this year. The view, contained in the bank's latest quarterly update, prompted investors to increase bets the RBA will cut its interest rate next month, rating the change of a 50-basis-point cut as about a 50-50 chance. The cash rate may be as low as 3.5 per cent in a year's time, from 4.75 per cent now, according to Credit Suisse data.

Shares fell as much as 4.6 per cent on the All Ordinaries Index at one point, or 202.2 points, to a two-year low of 4150.7. The losses add to the $65 billion or so lost since Tuesday. For the week, the ASX200 share index is off almost 7 per cent - a loss if retained would be the worst weekly result since November 2008, at the height of the global financial crisis.

‘‘We’re seeing a total collapse of confidence,’’ Brisbane-based fund manager Peter Wright of Bizzell Capital Partners said. ‘‘Three big sell-offs in a row like this haven’t been seen since the GFC.’'

Among major stocks, investment bank Macquarie Bank this morning fell more than 11 per cent, while mining giant BHP Billiton shed 5.2 per cent, while ANZ Bank, National Australia Bank and Westpac each fell about 5 per cent.....read on

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