Sharemarket’s worst week since 1987: Economy roundup

The Australian sharemarket has plunged more than 7% this morning as panic sweeps sharemarkets around the world.

The Australian sharemarket has plunged more than 7% this morning as panic sweeps sharemarkets around the world.

The benchmark S&P/ASX200 index fell by almost 8% in early trade, but has since recovered slightly. The index was down 6.8% or 293.1 points to be at 4027.8 points at 11:50am AEST.

Banks and financial services companies have again been hit hard, with National Australia Bank, Westpac, ANZ and Commonwealth Bank all falling between 6.6% and 8%.

Mining companies have also been smashed. BHP Billiton has dropped 9%, while Fortescue Metals Group has dropped 16%. Property companies include Valad Group (down a whopping 33% this morning) and FKP (down 20%).

Not a single top 200 company was in positive territory this morning.

The Australian sharemarket has now fallen to levels not seen since May 2005, meaning three years of sharemarket gains have now essentially been wiped out.

The market has now fallen about 17% for the week – the biggest weekly fall since the crash of 1987.

The panicked sell-off in Australia followed yet another horror night on Wall Street, where the Dow Jones plunged 7.3%. The cracks in the US economy are opening by the day.

Last night, shares in car giant General Motors tumbled 31.15% to their lowest level since 1950, as concerns mounted that as a leading forecaster warned global auto demand could “collapse” in 2009.

Oil giants Exxon Mobil and Chevron dropped sharply (11% and 15% respectively) as the price of oil dropped below $US87 a barrel on concerns a global slowdown would slam demand for energy.

The US banking and finance sector continued it’s downwards spiral. Morgan Stanley plunged 25.9% on concerns about the status of a planned $US9 billion investment by Japan’s top bank, Mitsubishi UFJ Financial Group.