China won’t safeguard Australia from global slowdown – The Australian 6-9-08

Excerpts from The Australian article and comments

“THE prospect of China safeguarding the Australian economy from the global slowdown is being discounted by financial markets, as commodities, currencies and equities plunge around the world.”

“The combination of a cyclical high in US unemployment statistics and a commodities sell-off combined to send Wall Street down 3 per cent on Thursday night. ”

Australian equities were down by 2 per cent and forcing the key benchmark indices below 5000 down 101 points to 4949.5.

“..nearly 3 per cent was shed from the Nikkei and the heightened risk-aversion, has deepened the savage sell-off in the Australian dollar. ”

“The ANZ downgraded its outlook for the year-end from US90c to US86c. The Australian dollar has blown through so many major support levels on the way down that it seems more likely than not that the dollar will be capped below US90c in the coming months”

“The dollar’s decline means it is now 18 per cent below the peak of US98c after just eight weeks. Analysts believe the currency markets and the sharp sell-off in commodities markets are signs that financial markets expect a gloomy economic global performance.”

“After weak manufacturing numbers, some now expect that a pronounced Chinese moderation could begin soon. The price of gold is down 17 per cent in the past two months and oil is off 21 per cent. The spot markets have begun to weaken, with copper and coal prices trading down 20 per cent.”

“…….. credit, interest rate and equity markets were now positioned for a strong global slowdown, despite some predictions the US weakness would not be widespread.”

“…….. base metal prices in whole-price terms have fallen at a 20 per cent annualised pace this year.

“….. the G3 economies with slow growth, the emerging economies will not be immune to that, you can’t have a globalised economy and not share the pain.”

“….. the fall in commodity prices, particularly the spot market, showed confidence was waning in future growth.”

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