The Aussie Hits 84 cents as Subprime Fears Go International

The Australian markets plunged as more funds reported losses associated to the US subprime mortgage market, particularly France?s largest bank BNP Paribas. Fear swept the markets and a number of central banks who have failed to persuade investors that the subrpime losses are contained started to inject liquidity into their economies. The Aussie dollar sunk to 84 cents against the benchmark dollar, the ASX left 6000 behind and the 10 year yield is once again under 6.0%.

RBA moves to steady nervous money markets - The Reserve Bank of Australia spent A$4.95 billion on debt and related instruments to sustain liquidity in the Australian market. The amount is twice the average that RBA pumps into the banking system, but the bank spokesman said that it was just regular money market operation. The RBA did not release any statement and did not deem the transactions special. Central banks around the world were doing the same. The European Central Bank injected 95 billion euros and US Fed pumped $24 billion to ensure markets stay liquid. The ECB move was most shocking to the market participants as it even exceeded the move that it took following the September 11 events and the panic that ensued. Central banks remain firm in their reassurances that the current market volatility will not undermine the strong underlying fundamentals.
[B]Source[/B]: The Australian,25197,22220863-20142,00.html
Westfield buys malls for $471m, sells four - The world?s largest retailer The Westfield Group announced today that it will sell four of its malls in St. Louis, Missouri and buy two in Florida. The company?s managing director Peter Lowy said Westfield is pleased to expand its presence in Florida. The four shopping centers to be sold are priced at $420 million and the Florida ones at $400 million. The transactions are expected to close within 90 days.
[B]Source:[/B] Herald Sun.,21985,22221495-5012062,00.html
Branson to buy 20pc of Malaysia’s AirAsia - British businessman Richard Branson will take a 20% stake in Malaysa?s AirAisia Fly Asian Express (FAX) media said today. AirAsia is scheduled to launch next month. Analysts noted that this move is a major coup against the founder and director against AirAsia?s chief executive Tony Fernandes, who currently holds 50% of FAX. The airline has already secured rights to fly to Australia and London.
[B]Source:[/B] Herald Sun,21985,22221444-5012062,00.html

While the Australian economic finishes out the week without a market moving indicator, the Aussie suffered a violent downfall that held over from previous session. The source of the tumble was France?s largest bank BNP Paribas?s decision to freeze three of its funds that invested in the US mortgages. The RBA and central banks in Europe and the US have injected large sums of money into the markets to ensure liquidity should panic take. However, these movements and the ongoing calming rhetoric of the banks did not restore investors? confidence and worldwide liquidation of commodity currencies and equities continued. The Aussie continued lower from the 86 cent area where it was at the time of our yesterday?s report, plunging towards 84 cents in today?s Asian session.

[B][U]Stock Market
[/U][/B]The ASX plunged today, absorbing losses both priced into the futures during yesterday?s plunge that happened minutes after its close and continued lower on strongly bearish sentiment and huge 2.83% fall of the Dow. Equities lost across all industries, the largest companies that weigh heavily on the index moving it the most. Mining giant BHP Billiton was in the lead with a 5.9% loss, National Australia Bank followed with a 3.4% loss and Commonwealth Bank of Australia closed the list of largest index movers with a 2.7% downfall. The index closed at 5936.0 with a loss of 229.6 points, erasing most of the gains from the previous 3 days and marking ASX?s worst day in six years.

[B][U]Bond Market
The 10-yr yield held its correlation to worldwide equities and dropped sharply below the closely watched 6.00% level. This represented a plunge of 13.4 basis points to 5.921%.