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Jan 16, 2008

Australian sharemarket takes another hit

The Australian sharemarket fell for the eighth session in a row this morning in the wake of a 277 point plunge in the Dow overnight, reports Glenn Dyer.

The Australian sharemarket fell for the eighth session in a row this morning in the wake of a 277 point plunge in the Dow overnight.

The All Ordinaries and the ASX/200 both fell by around 160 points by 10.30am, but pulled back slightly to be under 150 points down just before noon. That a fall of more than 2% and the market is now down 500 points or thereabouts in the first two weeks of trading in 2008.

The US lead, which was driven by a fall in retail sales in December and a worst than expected loss from Citigroup, saw upwards of $40 billion carved off the value of the ASX this morning as the major indices fell heavily.

The All Ords has shed around 1000 points since its peak last November. That makes it a very deep correction and the way sentiment is, it is on its way to a 20% fall, which market analysts say constitutes a bear market.

Falls in the prices of oil, gold and copper and a sharp fall in consumer confidence in the January survey from Westpac and the Melbourne Institute didn’t help.

Shares in Rio Tinto, which is due to make its fourth-quarter production report today, fell by more than $4 at one stage to $122.01 before recovering to $123.50. BHP fell to a low this morning of $36.69 before bouncing back to trade around $37.60 just before noon. That was a fall of $1.12 on yesterday’s close.

At thoses levels the chances of BHP going through with its $US150 billion paper bid for Rio are looking more and more remote.

Qantas, which was downgraded to a sell by Merrill Lynch yesterday, shed 25 cents to be around $4.63, its lowest level for more than 15 months.

Major banks were hit: the CBA was down $1.58 at $53.43 just before noon and the NAB shed $1.02 to $34.72. Other banks suffered smaller falls. Macquarie tumbled $2.66, or 3.5% to $67.24 and Babcock & Brown shed 71c to $21.60, after being down by around 90 cents at one stage.

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