Dollar hits new low as stocks plunge globally

By Tom Burton and wires

The Australian dollar slipped below 49 US cents in international trading this morning as stock markets plunged around the world, led by a 4.6 per cent fall in London - the biggest single daily drop since 1992.

The London FTSE index tumbled through the 5,300-point threshold for the first time for more than two years, down a hefty 4.6 per cent at 5,284.2 points.

As investors switched their money to US bonds, the Euro and the Australian dollar were hit, with the dollar reaching a new low of 48.91 US cents in London, before recovering.

In Frankfurt, the DAX 30 index slumped four per cent to 5,398.89 points. The Paris CAC 40 index nursed a loss of 3.7 per cent at 4,840.48 points.

European markets continued to feel the chill wind of Wall Street, where investors were rattled by plans announced today by consumer goods giant Procter and Gamble to axe 9,600 jobs, or nine per cent of its workforce.

The Dow Jones industrials slid to new two-year lows in early trade, shedding 2.2 per cent, while the tech-rich Nasdaq index eased 0.9 per cent.

A late turnaround pulled US stocks out of a tailspin this morning, as the Nasdaq roared back to life with a 3.7 per cent gain at the closing bell.

The Dow later recovered much of the 300-plus point loss but ended the session down 1.04 per cent.

"We're at a stage where sentiment is bearish and it is quite hard to see what turns it in the short term," Deutsche Bank equity strategist Bob Semple said.

"Nobody quite knows where the economy is going and when the turning point will be," he said. "Nobody's sure where it stops."

Alex Scott at Barclays Stockbrokers said investors were worried about the prospect of more bad news, after a series of profit warnings from major companies.

"The market is scared of more profit warnings to come and that's linked with the economic slowdown and it's probably going to continue for two to three months," he said.

After scaling record peaks in the past two years, Europe's share markets have fallen back to ground with a crash. The recent slide in the blue chip Dow industrials index was of particular concern, analysts said.

In Sydney, the Australian sharemarket is braced for a steep sell-off today after the plunge on Wall St and similar declines in European and Asian markets.

An indication of the expected Sydney weakness is trade on the Sydney Futures exchange.

At 0710 AEDT the March SPI 200 contract was down 31.0 points to 3165.0 on a volume of 2219.

The market will also be likely hit by John Fairfax Holdings Ltd's profit warning which was issued after the sharemarket closed yesterday.

"Over the last few weeks, it has become apparent that the economy has slowed substantially, and that the normal post-Christmas recovery in trading activity has not occurred," Fairfax chief executive officer Fred Hilmer said.

"This has affected a number of advertising market segments, including employment, national display and real estate."

Fairfax said the group's second half results were no longer expected to be stronger than that for the first six months of the financial year.

There are no other major company announcements expected today.

On the data front, the Australian Bureau of Statistics will release international trade in goods and services figures, building approvals data for February and new motor vehicle registrations figures for February.

http://www.smh.com.au/news/0103/23/update/news01.html

-- Martin Thompson (mthom1927@aol.com), March 22, 2001