Stocks dive on recession fears as investor confidence plunges

THE Australian sharemarket plunged 2.38 per cent yesterday amid fears the US economy was heading for a fresh recession and a survey revealed investor confidence in Australia has hit its lowest point since the first quarter of 2009.
About $30 billion was wiped from the value of Australian shares and Asian markets were also sold down heavily as the impact from the shock jobs numbers in the US that spooked Wall Street at the weekend was felt throughout the region.
The major European markets all opened more than 2 per cent lower last night. The Reserve Bank meets in Perth today to set interest rates for September. The interbank futures market tips there is a 22 per cent chance the board could order a 25 basis-point cut to the 4.75 per cent official cash rate. It also predicts that interest rates could be 127 basis points lower by this time next year.
The majority of economists have forecast that the RBA will leave rates on hold for the next few months.