There are no hiding places for investors looking for protection against the global slowdown that the Bush Republican administration and Wall Street has gifted the world.

Despite interest rate cuts by the US Federal Reserve and the $US120 billion in tax rebates, US investors are increasingly concerned that things are going to get worse: hence the 3% sell off on Wall Street overnight and big losses in Europe and Asian markets.

Even though our market fell 1.5% yesterday in a nasty slump, the futures market has the local bourse staring at another 3%, or 150 point fall today.

Markets are fearful that the US jobs figures and unemployment numbers, due tonight, our time, will be worse than though.

Amid some relatively encouraging news for the US economy yesterday was a nasty reminder of the big concern: a survey suggested US private employers sacked 33,000 people last month. And economists forecast that tonight’s figures would show that 75,000 jobs were lost overall last month. Some say over 100,000 jobs could be lost.

Wall Street has fallen four days in a row and the Standard & Poor’s 500 losing streak is the longest since January.

The US dollar rose to its highest level against the euro this year and against the Australian and NZ dollars as well.

The Australian dollar was sold off heavily: its now trading close to 81.20 US cents, having fallen 2 US cents in the past 24 hours and more than 4 cents this week so far.

While, oil, copper, gold and other commodities again fell overnight, the falls were not as large as earlier in the week.

Spooking the markets were moved by the central banks of the UK and the eurozone to leave rates on hold and not cut to try and help offset a slump.

Normally that should have been positive: no cut is better than a cut in the current mood, but investors looked at the downgraded growth figures from the European Central Bank, looked at another steep fall in UK house prices and thought: slump, sell.

Not helping has been a week or more of uncertainty in emerging markets: Argentina is on notice because of out of control Government finances, Russia has muscled itself into a near pariah state after its Georgia adventure: the market and rouble are weak and weakening and credit risk insurance on Russian bonds has risen sharply.

In Asia, Malaysia and Thailand are facing rising political and economic stability: South Korea is facing similar problems plus a weakening currency and even Japan is unstable with Prime Minister Fukuda resigning three days after bring in a $US1.5 billion economic stimulus package with spending and tax cuts attached.

Central banks have been reported intervening in Thailand, Malaysia, the Philippines, Indonesia and again in South Korea which has spent an estimated $US40 billion trying to support the won: it has failed as the currency has taken by more than 15% this year (at one stage it was down more than 17%.

The Aussie dollar’s fall this week is around 5% and its down around 17 cents from its high in July of more than 98 US cents: that’s a fall of more than 17% and yet our Reserve Bank hasn’t intervened: it has allowed the currency to be sold off as it cuts interest rates. The RBA knows that the floating currency is a shock absorber.

The fall in the aussie dollar means that the drop in local petrol prices will stop for a while: oil is down 27%, the currency more than 17%.

When oil peaked at more than $US147 a barrel, that was around $A151: at the current exchange rate this morning of 81.60, oil at $US107 a barrel or thereabouts is worth just over $A131.

That’s a fall of just $A20 a barrel compared to the $US40 a barrel fall in the actual price. Looked at another way, the Australian dollar price was $A4 above the US price, now it’s the best part of $A24: that means more expensive petrol than if the exchange rate had remained above 90 US cents.

It’s the downside of an easing economy and easing interest rates.

Peter Fray

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