The dollar plunged, and plunged, and its New Zealand counterpart went the same way. For a couple of hours our market and some in Asia went the same way, and yet when it was all over, the loss on the day was only just over 1%.
This is better than the 5% plus at the depth of yesterday's plunge. And Wall Street's late bounce will help steady nerves today: but it was more a result of rumours of an emergency meeting of the US Fed than any fundamental factor.
But the currencies' losses continued overnight: the Kiwi and the Aussie traded in New York at 78.98 USc and the Kiwi at 68.74 USc. The Aussie hit a low of 78.19 USc in New York.
It then had a small bounce back over 79 USc.
Commodity prices took a hiding: Gold dropped $US21.70 an ounce in New York to close at $US658 an ounce. Oil fell $2.13 a barrel to $US71a barrel. Copper plunged a massive 7%, or 23.1 USc a pound, to end at $US3.09.10 USc/lb in New York. Nickel, tin, lead and zinc were also weaker, as were grains like wheat and corn, plus sugar.
Every major commodity fell last night in New York as financial investors and other traders abandoned leveraged positions and retreated.
For oil the easing of a tropical storm warning added to the downward pressure.
Although traders will take heart from Wall Street's late rebound, the sell-off in commodities, especially copper, won't help here. We are in a market leveraged to copper with BHP and Rio being the major influences.
Traders' confidence yesterday wasn't helped by that temporary shutdown of the Futures Exchange, which meant the market had the brunt of sentiment and activity, with no way of laying off or hedging bets through futures.
Qantas was a prime example.
It reported very good earnings, higher dividend, forecasts of a higher 2008 result and a share buyback and then the shares tanked; absolutely, plunging to a low of $4.92, a loss of 36c, it then bounced so hard that it ended 2c higher on the day at $5.30!
The trigger for yesterday's sell off here and in Asia seems to have been the shock announcement from Rams that it had failed to re-finance more than $6 billion dollars in short term debt only two days after it warned that the subprime mortgage mess and credit market strains would have a 'material' impact on the company's earnings.
The news, made in an announcement at 10.33 am saw the market plunge. It had opened around 50 points down but after the Rams statement was announced, it fell sharply to be off 205 points on the All Ords at midday, and then fell to be more than 300 points down, or over 5%.
The news saw Rams shares hammered: they plunged more than 60% to 64c just before midday and then started a slow recovery to where they finished at 86.5c, with more than 35 million shares traded.
The company had only floated on the ASX on July 27 at $2.50 a share, so the original investors, if they have stayed in, are the heaviest losers on the ASX this year.
Rams said the "tightening of the global credit markets'' was the reason for being unable to sell $6.17 billion of so-called extendable commercial paper, the company's largest source of funding for its loans.
It said in a statement that it now has 180 days to refinance the debt, which compared to total debt of $14.17 billion.
Rams said the lender has been given temporary funding of $1 billion by two of its providers, which it did not name.
And that seems to have been the catalyst for the big sell-off.
That continued in Europe and the US before the late bounce in New York this morning, our time.
The Australian current rate under 80 USc is the first time it has been there since late February. The Kiwi dollar weakness was more marked than for the Aussie.
Both currencies were hitdue to unwinding of the yen carry trade. The yen had its best day for a year as it rose sharply.
South Korea's benchmark Kospi index fell while the Nikkei 225 Stock Average, Hang Seng and Straits Times indices all dropped more than 3% percent.
The Indian stockmarket fell and Europe was a sea of red.
Theyen was the onlywinner, rising across the board against all major currencies as investors closed out carry trades because of the rout in stocks and high yield assets.
And that will continue to be a major factor here, in New Zealand and other high yield countries like India, Brazil, Iceland, Latvia and even Canada.