(Australian) Shares soar, dollar surges on rescue plans

[depakid]

Source: Sydney Morning Herald

Australian stocks and the dollar have soared after dramatic moves at home and abroad over the weekend to shore up financial confidence and thaw the global credit system. Bank stocks were among the biggest gainers. In early trade, the benchmark S&P/ASX 200 index was up as much as 6.1%, or 241.6 points, to 4202.3. It recently traded at 4177 points, or up 5.5% for the day.

The Australian dollar leapt, gaining more than 4%, or almost 3 US cents to 68.07 US cents. Against Japan's currency, it advanced 3.7 yen, or 5.6%, to buy 68.77 yen. The rallies may be fleeting, however, given the historic levels of volatility buffetting markets and on-going worries about how much economies will slow, said research manager David Spry, of F.W. Holst & Co.

''The issues arising from the banking crisis are just not going to go away in the short term," Mr Spry said. ''It's the aftershocks that are really hard to measure. No one really knows how this will transpire."

Prime Minister Kevin Rudd yesterday announced that all deposits in Australian financial institutions would be guaranteed for three years. The government also doubled to $8 billion the funds available to improve liquidity in financial markets.

Read more: http://www.businessday.com.au/business/shares-soar-dollar-surges-on-rescue-plans-20081013-4z9r.html

[girl gone mad]

1. Who in their right mind is buying bank stocks today?

Many, if not most, will be taken over outright or their shareholders will be significantly diluted.

[depakid]

2. Most Australian banks are VERY healthy

There are only 18 AA-rated banks in the world, and four are in Australia.

[SahaleArm]

4. I don't think so - spent a month working in oz last summer.

They have a serious credit and housing bubble that is in the process of deflating. WA is getting killed as commodities prices crash. Sydney, Melbourne, and Perth. Where's the new jobs and income going to come from?

[depakid]

5. Unemployment is currently at 4.5% -worst case scenrio from the IMF is 4.9% for 2009

Compared with the rest of the world, that's pretty damn good.

The Aussie will recover- though hopefull not so much as to hurt exports ($.98 was ridiculous) as will commodities prices over the next year or two.

As far as I can tell with housing, there's still a shortage- so I don't expect to see the kind of plummeting that parts of America and Britain have seen.

[Josh]

3. Oooh great, 68 cents...

I am soooo screwed. I moved here to the States in Feb and if I needed any extra cash I'd dip into my funds back home in Australia. I didn't transfer much money because I was getting 7% interest back home.

Eight weeks ago the Aussie dollars was buying 98 US cents.

Now ... oh my goodness. So my funds in Australia are effectively frozen. :(