Added by Nigel Shelbourne on August 8, 2011
The Australian benchmark S&P/ASX-200 index closed down 2.91%, or 119.3 points, on Monday erasing $32bn in value and closing at 3986.1, the lowest in two years.
The benchmark S&P/ASX-200 index started trading down 2.2%, only to recover to 0.8% down by about 12:30 AST (02:30 GMT). The index closed later in the day, pushing the index under the 4,000 level for the first time since July 2009, its lowest in 25 months.
Today’s $32bn loss in value adds to the $95bn erased from the value of stocks last week.
Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong said “Markets have been choppy and illiquid. The broad bias is for further decline in risk appetite…despite attempts by policy-makers to allay concerns”.
Prior to the opening, finance officials from the G7 issued a joint statement pledging increased cooperation to handle economic issues and were committed to taking all necessary measures to support growth and financial stability. The statement followed an emergency conference call that discussed market prospects and the eurozone debt crisis. This level of activity on a Sunday in August (during the midst of a hot summer in the northern hemisphere) demonstrates how the twin debt crises in the US and eurozone have unsettled financial markets and increased fears the debt problems could derail the world’s recovery from the 2007-2009 financial crisis.
IMF chief Christine Lagarde has welcomed pledges made by the G-7 as well as the European Central Bank, France, and Germany, to take all necessary measures to stabilize the financial markets. “This cooperation will contribute to maintaining confidence and spurring global economic growth,” said Lagarde in a statement.
Many economists see the world’s central banks as a list line of defence in light of lawmakers’ failure to agree about key moves demanded by investors around the world.
Gold traded at a record of USD 1704.30 and the Australian dollar was at USD 1.0354, down from USD 1.0447, and off its late July 30-year high at USD 1.1080. The Australian dollar against the Japanese yen was at Y80.685, down from Y82.06.
The Shanghai Composite Index closed down 3.79% today to 2526.82 on turnover of CNY (yuan) 117.6bn or AUD 7.57bn – its lowest closing since July 19, 2010.