Friday, August 5, 2011
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
The Swiss National Bank (SNB) considers the Swiss franc to be massively overvalued at present. This current strength of the Swiss franc is threatening the development of the economy and increasing the downside risks to price stability in Switzerland. The SNB will not tolerate a continual tightening of monetary conditions and is therefore taking measures against the strong Swiss franc.
Effective immediately, the SNB is aiming for a three-month Libor as close to zero as possible, narrowing the target range for the three-month Libor from 0.00–0.75% to 0.00– 0.25%. At the same time, it will very significantly increase the supply of liquidity to the Swiss franc money market over the next few days. It intends to expand banks’ sight deposits at the SNB from currently around CHF 30 billion to CHF 80 billion. Consequently, with immediate effect, the SNB will no longer renew repos and SNB Bills that fall due and will repurchase outstanding SNB Bills, until the desired level of sight deposits has been reached.
Since the SNB’s last quarterly monetary policy assessment, the global economic outlook has worsened. At the same time the appreciation of the Swiss franc has accelerated sharply during the last few weeks. Consequently, the outlook for the Swiss economy has deteriorated substantially.
The SNB is keeping a close watch on developments on the foreign exchange market and will take further measures against the strength of the Swiss franc if necessary.
A global rout in equities drove the Standard & Poor’s 500 Index to its worst slump since February 2009, while two-year Treasury yields plunged to a record low amid concern the economy is weakening. The yen pared losses, recovering from the biggest drop versus the dollar since 2008 that was triggered by Japan selling its currency.
The S&P 500 tumbled 4.8 percent to 1,200.07 at 4 p.m. in New York with futures on the gauge slipping 0.2 percent as of 6:17 p.m. The S&P 500 has dropped 11 percent since July 22, the biggest loss over the same amount of time since March 2009. The MSCI All-Country World Index slid 4.1 percent as Brazil’s stocks slumped to a two-year low and Switzerland’s entered a bear market. Two-year yields declined as low as 0.25 percent. The yen sank 4.1 percent against the dollar before trimming its loss almost in half. Oil sank 5.8 percent to help the Thomson Reuters/Jefferies CRB Index of materials erase its 2011 gain.
Concern the global economy may relapse into a recession has driven investors out of stocks and into the relative safety of Treasuries, the Swiss franc and yen and is spurring speculation the Federal Reserve will start another stimulus program. Japan’s moves to sell the yen, which this week neared a post-World War II record, and expand an asset-purchase fund follows efforts by the Swiss central bank to curb the franc’s gains. The European Central Bank resumed bond purchases and offered banks more cash to stem the spread of the debt crisis......read on
Gold hit an all time high in AUD in turbulent overnight trading as the gold price hit a intra-day high of AUD$1590/oz before closing at $1571 on the COMEX. Price rises in AUD have been exacerbated by a falling USD:AUD exchange rate which has crashed from near $1.11 to under $1.05 in recent days.
This time Max Keiser and co-host, Stacy Herbert, report from New York City. They discuss the exorbitant privilege America is about to lose. They look at football players with AAA credit ratings and at Apple's cash stockpile bigger than Americas.