'One of those days you will never forget'
Eric Johnston reports on a roller-coaster ride for the sharemarket.
Eric Johnston reports on a roller-coaster ride for the sharemarket. THE Australian sharemarket has pulled back from the brink to lead a dramatic turnaround as expectations swept global markets the US Federal Reserve was poised to step in and bring some life back to the ailing American economy.After a stomach-churning 5.5 per cent plunge, triggered by a panic session on Wall Street, Australian shares staged a record recovery midway through yesterday's session to close in the black.The 268-point rally in local stocks was simply "extraordinary", said Goldman Sachs institutional dealer Richard Coppleson."Today was one of those rare days that you will never forget - we saw the greatest one-day recovery in the Australian market," he said.The benchmark S&P/ASX200 index finished up 48.7 points, or 1.22 per cent, at 4,034.8 points, marking one of the few markets in the world to finish in positive territory.Pummelled by days of sustained selling, the Australian dollar briefly fell to below parity slipping to US99? for the first time since March. The dollar later recovered to push back above US$1.02.The Treasurer, Wayne Swan, said Australia will continue to see economic growth given the positive outlook for the China. However, with global markets on edge he admitted we were in "uncharted waters"."What we've got to ensure is that countries, particularly G20 countries, work closely together in the days, weeks and months ahead to ensure we can respond to these conditions," Mr Swan said.Wide-ranging debt problems in Europe are still unsettling investors. The European Central Bank this week has sought to calm investors by providing support for financially troubled Spain and Italy. The fear is that financial contagion could spread to both countries, which would bring the crisis closer to France and Germany.While miners and bank stocks initially led shares deep into negative territory, the mood turned positive by mid-afternoon, with the US Federal Reserve tipped to announce fresh moves to stimulate its sputtering economy.These could include another round of buying its own government bonds, which is known as quantitative easing, or using stronger language to signal low official interest rates there would remain at record low levels for a longer period of time.Amid the volatility, investors clamoured for gold, pushing the price of the precious metal to a new all-time high of more than US$1,700 per ounce.In Australia, traders are betting the Reserve Bank could push through cuts of 1.25 percentage points in official interest rates to help insulate the economy from a global recession, despite the lingering concerns about inflation.InsideGold price shines even brighter amid economic gloom Page 4National Australia Bank 'strong enough' to withstand pressuresPage 5Michael West: Bargains galore if you can weather the risks Page 6