Australian share market's "black Friday": another sign of economic crisis

Yesterday, dubbed Black Friday by media commentators, the local stock markets suffered their biggest one-day fall ever in terms of values, wiping off more than $A95 billion and sinking below the $1 trillion mark. Prices dropped 8.3 percentthe worst percentage loss since the crash of October 1987taking the total for the week to 16 percent.

While the Australian falls echoed the huge plunges the previous day in Europe and on Wall Street, investor panic was intensified by clear signs of the end of the decade-long mining boom because of collapsing demand in Australias biggest marketsJapan, China and South Korea.

The mining and financial sectors led yesterdays collapse, with the energy sub-index losing the most12 percentafter Chinese steel mills began to slash iron ore orders, and the price of crude oil, which is Australias fourth-most valuable raw material export, fell to an 11-month low. Adding to the fears were two indicators of a deep downturn across Asiaa 9 percent fall in Tokyos share index, and Singapores entry into recession.

Since its peak on November 1, 2007, the Australian ASX200 index has now dropped by 43 percenta $750 billion fallcompared to 46 percent between 1929 and 1933, during the last Great Depression. The value of the Australian dollar has also plunged. As recently as July, it was heading for parity with the American greenback amid soaring world commodity prices. Yesterday it fell again to below 65 US cents, 65 yen and 0.5 Eurosa loss of a third of its value in three months.

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