Markets All Over The Place by Australasian Investment Review

A bad day for shares again.But did we see a steadying emerge in late US trading?

After bouncing all over the place and mostly in the red, the US markets looked like closing with a small gain, but anther late burst of selling saw the major indexes end off up to 2% or so.

The Dow fell 190 points, or 2%, the Standard & Poor's 500 index fell 1.1% and Nasdaq dropped lost 0.8%.

The major indexes again swung wildly throughout the session, with the Dow down as much as 252 points and up as much as 180.

The Dow's fall was also due to the weakness in Alcoa which reported a 52% slump in third quarter earnings the night before. Alcoa fell 13%.

Gold rose, then eased, but was still up, copper and oil weakened and some grains were firmer in Chicago.Gold was up $US27 an ounce to around $US909 in New York.

Our market was looking to start higher, but the late drop on Wall Street pushed the futures market down by 12 points.

The co-ordinated interest rate cuts from the Fed, the ECB, the Swiss, Swedish, Canadian and the UK central banks helped: the 0.50% drop in each case was dramatic, but emphasised the forcefulness of our 1% cut from the RBA which has put Australia firmly ahead of the policy curve.

China wasn't a part of the deal, but trimmed its key rate by 0.27% in a surprise move.

European markets were down sharply last night with falls of 3% to 5% common for another day. Japan fell more than 9% and other Asian markets were off more than 5%. Hong Kong's Hang Seng dropped 8.2% in an example of near panic trading, just like Tokyo.

London was very weak on the looming bailout fund announcement for the country's banks from the UK Government. London's FTSE 100 fell nearly 8% early on as investors were unconvinced about the bailout package.

Europe's Stoxx 600 Index was off 6% taking its loss this week so far to 13%. But the selling eased and it recovered from being down almost 8% atone stage.

The London FTSE 100 index of leading shares shed 5.2% after the bank bailout plan was announced, while in Paris the CAC 40 fell 6.4%.

Frankfurt's DAX lost 5.8%, the Swiss market shed 5.5% and 5.2% in Madrid after the Government there revealed a bailout plan. Milan fell 5.7% after it was suggested the country's banks needed to raise more capital.

The MSCI Asia Pacific Index fell 7.4% with Tokyo's Nikkei off 9.4%, the biggest drop since October 1987. Australia lost 5% or more, Indonesia shut after a 10% fall and Hong Kong's Hang Seng fell to a fresh 2 year low despite an effective rate cut.

The Index is now off more than 42% this year

In Europe Russia's market was again closed after the main index fell more than 10%. The main US dollar index was off 14% when trading stopped. trading was also halted in the Ukraine and in Rumania.

The euphoria of Australia's rate cut on Tuesday was swamped after Wall Street fell more than 5% in a miserable day's trading that extended across the region.

Oil was easier, down by more than $US4 to just over $US86 a barrel, a 10 month low; copper lost ground to around $US2.49 a pound and gold edged up $US4 to trade around $US886 in Europe last night.

The Indonesian market was halted when the main index fell more than 10%. Jakarta's main index has tumbled 21% in the past week; the biggest drop in 25 years. Brazil's market was at two year lows. It's down 22% in the past five days.

The Nikkei plunged 9.4%, its biggest one-day drop since the 1987 stock market crash, as fear spread of a global recession, fuelled by expectations of a slide in profits at Toyota and the rapidly firming yen.

Volkswagen this week moved past a falling toyota to become the world's biggest car maker by market value. Volkswagen is subject to takeover speculation in Germany.

Tokyo brokers said that panic over the fast-spreading financial crisis dragged down markets across the region and in Japan the Nikkei set another five-year closing low.

The Hang Seng slumped 5.5% despite Hong Kong's monetary authority cutting interest rates to keep the credit crisis from spreading.

India's Sensex Index fell 3.1%; China's CSI 300 lost 3.8% and South Korea's Kospi lost 5.8% to the lowest since July 2006.

Australia's ASX 200 Index declined more than 5% as building approvals declined for a seventh month and consumer confidence fell. Alumina, an associate of Alcoa, lost ground after partner Alcoa reported a 52% drop in earnings. Alumina shares closed down 16% at $A2.50.

It was Australia's second-worst day of the year, closing down 5%, wiping out all of Tuesday's Reserve Bank-inspired rally and adding more than 3% in losses for good measure.

It was also the lowest close in three years for the stockmarket, while the Aussie dollar also plunged, hitting a low of well under 68 US cents (67.49 US cents in local trading)

The ASX200 index closed 230.6 points, or 5%, lower at 4388.1. The fall was second only to January 22's 7.1% hammering.

Among the banks, the ANZ Bank lost 6.3%, or $1.15, to $17.00, while NAB shed $1.65, or 6.4%, to $24.35.

Westpac dropped 6.9% or $1.60, to $21.67. The Commonwealth was in a trading halt after announcing it would pay $2.1 billion for BankWest, raising some $2 billion from institutional investors. St George lost 7.4%, or $2.24, to $28.12 and Suncorp shed 8.1%, or 89 cents, to $10.11.

Macquarie Group shares lost 9.2%, or $3.30, to $32.50 and Babcock and Brown fell 20%, or 25.5 cents, to $1.05.

Mining companies were again savaged as investors ignored the impact of a falling Australian dollar to focus on the worsening commodity prices and diminishing prospects for global economic growth.

BHP Billiton lost 5.7%, or $1.80, to $29.90, while its takeover target, Rio Tinto dropped 7.6%, or $6.65, to $81.12.

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Australasian Investment Review (AIR) is a free daily news service covering global financial markets with a focus on Australia, New Zealand and Asia. Subscriptions are free at aireview.com.au