France, Germany, Spain, the Netherlands and Austria committed 1.3 trillion euros ($US1.8 trillion) to guarantee bank loans and take stakes in lenders, racing to prevent the collapse of the financial system.
The ANZ Bank says Australia will be looking at much higher unemployment than expected in a year's time.
The Australian share market ended a horror week on Friday, down more than 8% in a session that wiped A$106 billion from the value of stocks on the bourse. Last Friday the S&P/ASX200 index fell 8.3% in mid-afternoon trading, losing 360.2 points to plunge to 3960.7, the biggest one-day loss for the ASX200 index. Its affiliate, the All Ordinaries index, had its worst day since the October 1987 crash, losing 8.2%, or 351.9 points, to 3939.4. The ASX200 lost almost 16% for the week, about three times the amount it lost in the week after the September 11 attacks in 2001.
The market has started the week off well and is recovering most of Friday's heavy losses – up 210 or 5.3% - blitzing the 27 point gain the SFE Futures predicted this morning. Since Wall Street closed on Friday, 15 European leaders in a unified approach have agreed to guarantee all new bank debt until end of 2009 and prop-up any big lender to prevent any more collapses. Australia has also guaranteed interbank lending and bank deposits (unlimited) – all central banks had to follow suit or risk being frozen out of interbank markets by other countries that have guarantees. There is also a comment this morning from the Chinese Central Bank saying they will promote rapid growth.
Well, New Zealand, Australia and then other Asian markets will take the lead today as the US has a part public holiday tonight for Columbus Day.
A bad week for commodities last week which helped on Friday to hit some sectors of the US stockmarket during the day of wild swings.
On one issue this week: the markets and will they continue to act like headless chickens and continue to be driven by the fear and loathing of panicking hedge funds and others trying to get out, or whether they will be a steadying tone.
