The Australian share market collapsed to an eight-month low in early trade this morning but pared losses as the inquest into Wall Street's biggest ever intraday plunge continued.
At lunchtime the ASX 200 was down 49 points or 1.1% at 4524 and on target for its 10th losing session in the last 11. Earlier the index slumped to 4427, a level it last saw in September 2009.
Financial stocks copped the worst of the selling, slumping 2.4% as investors trimmed holdings in bank stocks on fears that the European debt crisis will spark another credit freeze. Other sectors suffering significant losses included telecoms -1.9% health -1.7% and industrials -1.6%. Resource stocks led the recovery. The gold sector advanced 1.5%, metals & mining 0.5% and materials 0.4%.
In the U.S., regulators were working late into the night to examine "unusual" trading activity during last night's plunge, which saw Dow index-component Procter & Gamble fall plummet 40%. The Nasdaq trading exchange announced that it will cancel some of the trades made during the extraordinary freefall.
Rumours that a major firm (possibly Citigroup) accidentally triggered a trading program worth US$16 billion, instead of US$16 million, at the Chicago Mercantile Exchange were dismissed by the exchange's owners. Owner CME said trading by Citigroup "does not appear to be irregular or unusual in light of market activity today". Read more here
In local economic news, the Reserve Bank said this morning it expects the economy to accelerate over the next two years. In its quarterly statement on monetary policy, the central bank said it expected GDP to grow by 3.75% in the year to June 2011, up from 3.5% predicted in February.
Asian markets were predictably weaker. Japan's Nikkei slid 3.4%, Shanghai 0.5% and Hong Kong's Hang Seng 0.7%. Dow futures were recently at an increasingly bullish +44.
Crude oil futures clawed back another 52 cents this morning to reach $77.50 a barrel. The spot gold price eased back from last night's high, recently trading at $1,200 an ounce.
It's starting to look like last night may have been capitulation night in the U.S. and our market is gambling on a bounce. Looks like there are shorts covering and a nice hammer developing on the XJO. I was too bearish with my pre-market buy orders and didn't get anything like as many entries as I wanted. Looked for shares opening at support levels and that got me into ARG, HSP, NKP, AZZ and IOH. All profitable, but nothing like Wednesday's dream session. Bought AAX on the recent pullback and added PTM in case this index recovery has legs. Hope others have done well out of this.
