More than $50 billion wiped off the capitalisation of the Australian stockmarket in the most serious reaction to the subprime mortgage crisis and its fallout for a couple of months.
The Australian market is now down almost 4% in two days after yesterday's 100 point-plus fall, the second in as many days after Citigroup owned up to more losses.
Asian markets tumbled, especially Hong Kong (see below) which fell 5% after the Chinese Government delayed a freeing up of overseas investment by Chinese investors.
Tokyo was also weak, as were China's markets, despite the PetroChina listing in Shanghai which set records.
European markets were off the boil and the US was again hit by worried about banks and financial stocks in the wake of the Citigroup changes and new losses.
The CEO departure at Citi hit market confidence in our banks, while our major driver recently, the big miners, also weakened after reacting to falls in base metals, especially copper
As well, the market is resigned to another interest rate rise to be announced tomorrow by the Reserve Bank.
Australian shares fell 1.7% yesterday to a two-week closing low after falling around 130 points on Friday. The market tumbled by 1.9% on Friday.
Wall Street's stuttering positive finish on Saturday morning, our time, didn't help sentiment which took its lead from the Citigroup changes and bigger losses and the reaction to lower copper prices.
The ASX 200 index fell 114.3 points to 6,582.3 yesterday, after falling 1.9% on Friday.
The All Ords was off 106 points yesterday after a 127 point fall on Friday.
The big banks led the market down, with the ANZ falling 19c to $29.79, the NAB 60c to $42.50, Westpac 33c to $30.15 and the Commonwealth Bank $1.12 to $60.08. St George fell 51c to $36.25.
The only thing in their favour is that the losses were bigger earlier in the day.
The big miners went backwards, with BHP Billiton falling $1.30 to $43.70 and rival Rio Tinto down $2.21 to $108.75. They both were lower in early trading.
The concentration on the iron ore boom has diverted attention from weakening base metal prices, especially copper, which has lost ground for the past month or more.
Higher oil and gold prices have also attracted attention away from the sub-par performance of metals. Nickel, lead and zinc have also been mixed as worries about the performance of the US economy and a shake-out in speculative interest offsets the continuing Chinese factor.
The gold price was around $US813 an ounce, up $US23 from Friday's close in Sydney of $US790.15 an ounce.
Oil weakened this morning to end around $US94.
