Surprise NAB losses trigger market slide: Economy roundup

The Australian sharemarket has been brought plummeting back to earth this morning following a sharp reminder of its continuing vulnerability to the global credit squeeze.

The Australian sharemarket has been brought plummeting back to earth this morning following a sharp reminder of its continuing vulnerability to the global credit squeeze.

Financial stocks tumbled after the National Australia Bank announced that it has been forced to lift its provision for losses stemming from exposure to the US financial market by $830 million.

The S&P/ASX200 fell 3% immediately following the announcement and had yet to recover several hours later, still languishing down 3.4% on yesterday’s close to 4970.8 at 12.25pm.

NAB shares fell more than 13% on the revelation, and by 12.10pm were still down 10.42% on yesterday’s close to $27.50. The other big banks have also been hit hard, with ANZ Bank, Commonwealth Bank and the Bank of Queensland all down more than 5%.

A poor night on US markets overnight – the Dow Jones closed down 2.43% to 11,349.28 – also fed into the negative sentiment this morning, triggering selling in companies with a heavy US focus such as James Hardie and Westfield, both down more than 7%.

There was a bigger than usual reason for the US gloom, with car manufacturer Ford announcing a massive $US8.7 billion loss for the June quarter. News of a 34,000 jump in jobless numbers and a 10 year low in new home sales for June didn’t help the mood.