THE Australian stock market continued its freefall today, tumbling more than 8 per cent by early this afternoon.

Just after 3pm , the benchmark S&P/ASX200 was down 344 points to 3976, while the broader All Ordinaries had fallen 341 points to 3948.

More than $70 billion has been wiped off the value of All Ordinaries stocks so far today, and $170 billion since last Friday’s close.

CMC Markets senior dealer Matthew Lewis said the local indices falling below 4000 points in trading this morning had been a psychological blow to investors.

“It really is total market capitulation today,” Mr Lewis said.
“We’ve seen the market fall below quite a psychological level today, being the 4000 barrier, which is pretty important for the market.

“It has bounced back a little bit since then but going below that is the lowest we’ve seen for five or six years.”

The losses add to the $94 billion already stripped from the value of stocks covered by the All Ordinaries index so far this week

The market followed the trend set by Wall Street overnight, with the Dow Jones falling more than 7 per cent to its lowest point for more than five years.

The Dow Jones Industrial Average plummeted 659.96 points (7.13 per cent) to 8598.14 at the close, the seventh straight loss for the Wall Street index as jitters intensified over the global financial crunch.

European share prices also wilted after a mid-day rally as investors remained jittery over the credit freeze despite desperate moves by governments to shore up banks and boost confidence.

As anxiety reached new highs and markets reached new lows, US authorities raised the prospect today of direct capital injections into troubled banks and Europe’s central bank opened up an unlimited cash lifeline.

But finance officials from around the world were bickering ahead of a key gathering in Washington, and the International Monetary Fund (IMF) called for more coordination instead of unilateral action.

A new emergency fund announced by the IMF to bail out banks at risk of failing did little to settle the panic.

The White House, meanwhile, denied reports that President George W. Bush had called a Group of Eight summit on the global financial crisis and Britain blasted Iceland for freezing bank accounts.

Also in Washington, officials said they were considering following Britain’s move to inject capital in banks through special shares in an effort to unclog credit markets.

Analysts said markets, which sustained huge losses earlier this week were still being driven by fear and panic in the midst of a global banking crisis that showed few signs of easing.

Share prices fell sharply in Europe despite a decision by the European Central Bank to offer an unlimited cash lifeline for credit-starved institutions.
by Staff and writers
10th October 2008

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