Australian shares hit a three year low yesterday in another day of miserable trading and in Tokyo, Japanese shares hit a four year low point.
European markets were under siege last night, with an $89 billion bail-out planned for Germany's second-best mortgage bank, Hypo Real Estate Holding. The Dow Jones Stoxx 600 was off more than 4% in early trading, the MSCI Asia Pacific Index shed 4.4%.
Tokyo, had its lowest close since July, 2005 and the US Standard & Poor's 500 Index was off more than 2% in pre-market trading last night.
The main dollar-quoted Russian market plunged more than 12% in early trading, London traded at a four year low and Germany at two year lows as investors sold off willy-nilly.
The Australian dollar slumped to its weakest against the US dollar in two years. The US rose to a 13 month high against the euro, thanks to the worsening financial situation in Europe where authorities are struggling to contain a crisis. Germany joined Ireland, Greece and Italy in guaranteeing bank deposits, especially from individuals.
In early afternoon trade, the ASX200 index was down as much as 178.6 points, or 3.8%, to 4516.8. The slide took the index below the 4,600-point level touched during last month's market panic after the failure of US investment bank, Lehman Brothers.
At the close the index was down for the seventh of the past eight days, losing 155 points, or 3.3%, to 4540.4; the lowest close since November 9, 2005.
The Australian dollar was also weaker, hitting a two year plus low.
Oil fell under $US90 a barrel in European trading last night. It fell more than 4% to just over $US89 a barrel.
Japanese share prices slid 3.6% in morning trade hitting that four-year low on worries about the financial crisis. They ended down 4.5%.
The Tokyo Stock Exchange's benchmark Nikkei-225 index fell 393.81 points to 10,544.33 by the lunch break, levels last seen in May 2004.
All markets open for trading in Asia declined, with benchmark stock indexes in South Korea, Taiwan and Australia falling more than 3%. China was off 5.1%. The Hong Kong market hit a two year low yesterday.
Driving the gloom was the worsening of the financial crisis in Europe with the bailout of Hypo real estate in Germany rising to 50 billion euros, all of which will come from the Government and the banking industry.
Hypo's part in raising 15 billion euros in asset sales was not mentioned in the new package which was forced on the government after Hypo's financial position worsened and the first 365 billion euro deal collapsed.
Fortis's first rescue fell over and then being done separately in two big deals with the Dutch Government buying one bit for 16 billion euros and the BNP Paribas of France buying 75% of the rest for 11 billion or so euros.
In Italy UniCredit, Italy's second biggest bank held a Sunday board meeting and agreed to raise more than 6.6 billion in euros of fresh capital with over half that coming from abandoning cash dividends to shareholders and paying them in shares, as UBS of Switzerland is doing.
The Aussie dollar shed one US cent yesterday morning as financial markets worried about the events in Europe and the prospect of a bigger than usual 0.50% interest rate cut today from the Reserve Bank.
That took the loss on the currency since its high of 98.49 in mid-July to 23%.
It has lost 8.4% of its value in the past week alone as the US dollar has soared on demand from nervous investors looking for a safe home. That has kicked commodity prices lower, led by oil, gold and copper, which in turn has fed through into downward pressure on local share prices and of course the Aussie dollar.
The Australian dollar sunk to 74.91 US cents in late morning trade yesterday, the lowest level since October 2006. That's lower than the sell -off in the wake of the first eruption of the crunch back in August-October of 2007.
BHP Billiton fell 63 cents, or 2.1%, to $29.79 - the lowest close in 17 months. Its takeover target, Rio Tinto slumped $4.43, or 5%, to $84.48. The bid (3.4 BHP shares for every Rio share) was worth $101.28, 16.5% under the bid value.
BHP shares were lower in London last night, as were Rio and all other commodity groups.
Fortescue Metals lost 56 cents, or 11%, to $4.41. The shares have shed nearly two-thirds of their value in the past three-and-a-half months.
Westfield slumped nearly 6% or more than $1 to $17 on news of rising vacancies in US shopping centres.
According to a report from the US, vacancies at US neighborhood and community shopping centres reached a 14-year high in the third quarter, rising to 8.4%, while at regional and supermalls, the vacancy rate rose to 6.6% last quarter from 6.3% in the second quarter, the highest since the fourth quarter of 2001, when it was 6.8%. Vacancies were up from 5.5% a year earlier.
Among the banks, the ANZ fell 63 cents, or 3.5%, to $18.05, the Commonwealth, $1.01, or 2.2%, to $44.00, the NAB, 60 cents, or 2.3%, to $25.55 and Westpac 71 cents, or 3.1%, to $22.50.
Investment bank, Macquarie Group lost $4.10 or 10%, to $35.00.
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