THE share market was down 4 per cent at noon after a horror session on Wall St overnight, where stocks fell to a five-year low.

At 12noon (AEDT) the benchmark S&P/ASX200 was down 4.08 per cent at 4430.2, while the broader All Ordinaries index had lost 4.03 per cent, to 4412.7.

Macquarie Equities adviser Helen Spencer said the share market was “cautious and nervous” as it awaited news now about interest rate cuts from overseas.

“The market gave up most of yesterday’s gains after heavy losses in the US overnight and resources are trading lower,” Ms Spencer said.

Commonwealth Bank of Australia shares remain in a trading halt following the bank’s announcement this morning of its agreement to purchase two local arms of UK bank HBOS, retail banker BankWest and wealth manager St Andrew’s, for $2.1 billion. CBA last traded at $45.15.

ANZ Banking Group dropped $1, or 5.51 per cent, to $17.15 and National Australia Bank fell $1.82, or seven per cent, to $24.18. Westpac shed $1.15, or 4.94 per cent, to $22.12 and its takeover target St George Bank was off by $1.60, or 5.27 per cent, to $28.76.

Among the miners, BHP Billiton lost $1.86, or 5.87 per cent, to $29.84, while takeover target Rio Tinto fell $5.04, or 5.9 per cent, to $82.73.

No end in sight

Aequs Securities institutional dealer Ric Klusman said the effect of the Reserve Bank’s interest rate cut yesterday had worn off by this morning.

“We’re not seeing any respite today; we’re actually under severe pressure,” Mr Klusman said.

“The one percentage point off interest rates yesterday is obviously going to help mums and dads, but the rest of it is rooted.

“The US futures are already down again in Asia, so people are very, very nervous that Europe will get belted tonight as they didn’t see a lot of the late losses in the US session, and people just think it’s going to get worse.”

The local market is likely to close about 200 points lower, Mr Klusman said.

“It’s looking pretty messy,” he said.

CMC Markets corporate services manager Joe Youssef told the losses on the local market weren’t surprising, given the “massive negative bleeding” in the US overnight.

“The clear message is that whilst yesterday’s interest rate announcement was not just welcome, but caught the market well and truly by surprise,” he said.

The rally last night meant the market was set to fall on the start of trading.

“It highlights the markets are still inherently nervous,” Mr Youssef said.

“There’s no question, not just this week, but what’s transpired for the best part of this year now has been unprecedented and what’s really hitting home hard is no one really knows the true final magnitude of it.”

Global markets slammed

The market was expected to take a hit after Wall St plunged 5 per cent overnight – the fifth straight session it has fallen – as fears mounted that the spiralling credit crisis would drag the US economy into a deep recession.

The Dow Jones Industrial Average sank 500.75 points (5.03 per cent) 9454.75 at the closing bell.

European stocks also fell overnight, with the FTSEurofirst 300 index of top European shares ending 0.14 per cent lower at 1003.51 points. It is down about 33 per cent so far this year.

The ASX opened down 3 per cent yesterday, but rallied in the afternoon after the Reserve Bank cut the interest rates by 1 per cent.
By Staff Writers
8th October 2008

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