Sydney, Oct 23, 2008 AEST (ABN Newswire) - US stocks dropped sharply to five-year lows overnight with an increasingly dire outlook for the global economy.

On Wednesday, Australian stocks fell again following a weak Wall Street lead, losing almost all of the gains from previous day. It was hurt by a fall in resources stocks on global recession fears and by disappointing US company earnings that stoked worries about the outlook for profit growth.

The benchmark S&P/ASX200 was down 146.4 points, or 3.4%, at 4156.1, while the broader All Ordinaries lost 131.3 points, or 3.09%, to 4120.01.

At 7.17am, the December Share Price Index futures contract on the Sydney Futures Exchange was down 191 points at 3968.

Today the Australian dollar opened marginally weaker as a 16 per cent plunge on the Argentine stock market turned traders off riskier currencies. At 0700 AEDT, the Australian dollar was trading at $US0.6681/85, down from yesterday's close of $US0.6687/92.

Crude oil prices plummeted after surging US energy reserves highlighted falling demand in a cooling global economy, and ahead of an OPEC financial crisis meeting. New York's main contract, light sweet crude for December, skidded $US5.28 to close at $US66.90 a barrel.

Key Economic Facts and Figures

Inflation hit its highest level last quarter since 1995, but it's not expected to stop the Reserve Bank from cutting interest rates. The inflation rate for the September quarter hit 1.2 per cent, which took the yearly rate to 5 per cent, the largest annual increase since the December quarter in 1995.

Today, Treasurer Wayne Swan said: "In terms of inflation I think this is expected to be its peak, and we would hope to see it moderate over the year ahead." Economists said it was increasingly likely that the inflation data would force the Reserve Bank of Australia to make a smaller than expected interest rate cut next month.

JPMorgan also forecasts the unemployment will be at 9 per cent by late 2010, up from the current rate of 4.3 per cent.

The Housing Industry Association releases its HIA-Commonwealth Bank affordability report for the September quarter today.

M&A News

Allco Finance Group's (ASX:AFG) satellite fund, Allco HIT(ASX:AHI), has failed in its attempt to sell its stake in New Zealand property financier Strategic Finance(NZE:SFLHA), when Strategic's founders and management decided against a buy-out due to the weakening credit market.

Woolworths(ASX:WOW) said the company is cashed up and could afford to make more than one major acquisition. With the hardware sector one of the few markets Woolworths can enter without running into competition issues, the retailer has recently held discussions with the Mitre 10 chain. Rival Wesfarmers'(ASX:WES) Bunnings chain may also be of interest.

Important Corporate News

Macquarie Infrastructure Group(ASX:MIG) has forecast revenue and earnings growth in fiscal 2009, as the company increases the charges on its motorways. Toll revenue in the quarter to September rose 2.8% as the company raised tolls, which offset subdued traffic volumes during the period.

ANZ Banking Group Ltd(ASX:ANZ) has reported a 21 per cent fall in full year profit, after its bottom line was hit by charges related to the fall-out in global credit markets. Net profit for the year ended September 30 was A$3.319 billion, down from A$4.180 billion in fiscal 2007. Cash profit, which is adjusted for none-core items, was A$3.029 billion, down 23 per cent on the previous year.

Gaming firm Tabcorp Holdings Ltd(ASX:TAH) says it expects normalised first half results for fiscal 2009 to be modestly ahead of last year, providing trading conditions do not change materially. Tabcorp reported a normalised net profit before non-recurring items of A$261.9 million in fiscal 2008.

1. Related Stocks - Mid market (12:45 AESTD)
-----------------------------------------------------------    Code    % Change   Volume  Turnover        Low     High-----------------------------------------------------------ASX:AFG     -7.69     675,864  $83,255         11.5    13.5ASX:WOW     -.81      893,734  $24,114,323     2670    2711ASX:WES     -2.59   1,257,694  $27,337,167     2081    2140ASX:MIG     -4.3    3,034,449  $6,170,981      197     207ASX:ANZ     -4.89   5,546,988  $100,429,968    1792    1847ASX:TAH     -2.47   1,124,572  $7,974,888      700     730-----------------------------------------------------------
2. Top 10 ASX on Turnover - Mid Market (12:45 AESTD)
----------------------------------------------------------------    Code   % Change Volume          Turnover        Low     High----------------------------------------------------------------ASX:BHP     -7.88   15,162,533      $382,808,364    2415    2523ASX:RIO     -15.43  3,041,945       $202,677,778    6560    6710ASX:ANZ     -4.89   5,546,988       $100,429,968    1792    1847ASX:NAB     -.97    3,213,499       $81,307,137     2500    2570ASX:WBC     -2.58   3,263,150       $70,963,768     2129    2211ASX:CBA     -1.33   1,284,028       $53,615,344     4080    4185ASX:TLS             12,757,028      $51,687,786     401     409ASX:WDC     -3.16   3,253,520       $49,618,015     1494    1560ASX:ORG     +.12    2,675,037       $42,714,166     1570    1615ASX:CSL     -1.69   1,174,168       $39,586,918     3305    3435----------------------------------------------------------------


Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344

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