Shares dive on US wobbles: Economy round-up

Renewed worries about the impact of the crumbling sub-prime mortgage market in the US have caused the S&P/ASX 200 to tumble 2% on yesterday’s close to 6402.6 by 12.45pm today.

The fall was triggered after a US broker Goldman Sachs downgraded its rating of Citigroup shares from “hold” to “sell” because of its exposure to the sub-prime market.

This caused the Dow Jones Industrial Average to tumble 1.66% overnight to 12,958.44, and spooked Australian markets when they opened this morning.

The uncertainty has also pushed the Australian dollar lower to US97.86c, down on yesterday’s US89.36c close.

The experience of SMEs at the moment couldn’t be more different, however. Small business sales revenue and profits hit record highs in the September 2007 quarter, according to the latest Australian Chamber of Commerce and Industry small business survey.

The survey’s sales revenue index rose to 60 and its profitability index to 51.6 in the three months to September, both 10-year highs that are well above their five-year averages of 56.2 and 48.1 respectively.

Small businesses are also very confident about the months ahead, with business predicting strong increases in revenue and profits, and falls in wage costs and overtime utilisation.

Small businesses outperformed larger businesses across most of the indicators in the survey, ACCI found.