Election over, market falls on more sub-prime woes: Economy round-up

Forget the election – it is the US economy’s sub-prime woes that have caught the attention of Australian markets today, driving the S&P/ASX200 1.7% lower on yesterday’s close to 6559.1 by 12.25pm.

Although the fall has yet to undo the full extent of yesterday’s 2.24% gain, it serves as a renewed reminder that significant concerns remain about the possible future impact of the sub-prime meltdown in the US.

Pessimism about the exposure of the US’s biggest banks to huge losses as the sub-prime mortgage default rate continues to grow drove the US Dow Jones index 0.89% lower overnight.

This, in turn, spooked holders of Australian financial stocks, with shares in Macquarie Bank and NAB both falling by over 2% in this morning’s trading.

The Australian dollar has also lost value this morning, falling from US88.33c at last night’s Sydney close to US87.22c at 12.30pm today.