The Lehman Brothers collapse saw shares in America and Europe plunge after a smaller than expected fall in Asia-Pacific shares yesterday was tempered by Japan, China and South Korea being closed for a holiday.
For US shares, it was the biggest fall since September 11 and the Fed's $US70 billion cash injection into US credit markets was the largest such move since that fateful time.
Our market was off around 80 points, or 1.7% after being down 2%. The overnight futures market had it off well over 2% on the ASX200 with a opening down 134 points on the share price index.
US share futures were easier, down by more than 3% in futures trading in Asia and Europe. That equated to more than 300 points on the Dow and over 42 points on the Standard & Poor's 500.
And that's how they opened and traded for most of the day until the bears stepped in to send the market lower in late dealings.
The Dow closed down 4.4%, or 504 points: it lost ground in the last 20 minutes and closed under 11,000 points; the S&P 500 shed 4.7%, or 58 points to fall under the 12 point mark. Nasdaq fell3.6%.
Financial stocks like Washington Mutual, American Insurance Group and most banks and insurers were hit.
The US dollar was weaker, gold rose, but oil remained under $US100 a barrel and hit a low under $US95 a barrel, before closing down 5.4%. Late dealings saw oil slip under $US95 a barrel again.
Oil actually hit a 7 month low, in a rare bit of good news. Gold bounced $US23 an ounce to around $US788 an ounce. Silver rose, copper was weak.
With the US Federal reserve meeting tonight to consider interest rate settings, a cut from 2% wouldn't surprise after the trading yesterday and the loss of confidence.
The US dollar was mixed, trading lower, then higher and then falling: the Aussie dollar traded around 80 -81 US cents for most of the night.
US treasury securities firmed, with the price surging and the yield dropping as investors ought a bolt hole away from the sharemarket. The yield on the 2 year bond closed at 1.73%, a level not seen since April in the aftermath of the volatility in the wake of Bear Stearns’ bailout.
Ten year bond yields hit 3.42%.
In London the FT 100 fell 4% or more than 200 points.
Macquarie Group, our biggest investment bank, slumped 10% (That's what it rose a week ago after Fannie Mae and Freddie Mac were rescued. remember them?)
Macquarie Group fell to $39.46, the lowest since January. Babcock and Brown tumbled 15% to $1.625 as former CEO, Phil Green quit the board.
Banks and other financial shares lost the most ground and because of those holidays, first big market to open in Asia was Australia which dropped more than 2% before a slow rebound in the afternoon.
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