Chris Jenkins News editor

Chris works from BRW's Sydney newsroom. He has previously written and edited in print and online for titles including The Australian Financial Review and The Australian.

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Markets slump, $A below US92¢ as stimulus fallout continues

Published 21 June 2013 07:16, Updated 08 August 2013 15:11

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Markets slump, $A below US92¢ as stimulus fallout continues

Equity investors in the US and Europe saw big falls overnight, with falls of over 3 per cent on some indexes. Photo: Getty Images

The Australian dollar has slipped below US92¢ and global share investors have been belted in a dramatic round of global trading overnight.

The Aussie fell as low as US91.60¢, taking it to near three-year lows, as currency buyers returned to the safe-haven greenback in droves.

The Aussie dollar wasn’t the only one in for a wild ride, with share investors in the US and Europe seeing big falls.

The slips came after falls on Thursday prompted by indications from US Federal Reserve chairman Ben Bernanke that America’s massive stimulus program is starting to wind down.

Australian dollar vs US dollar, March to June 2013Source: afr.com

New US economic data backs the Fed’s view that America is starting to get back on its feet, with home re-sales hitting levels not seen since 2009 and indicators that factory activity is picking up.

With the US stimulus program drawing to a close, “the market has had its safety blanket taken away”, Chris Wyllie, chief investment officer at London wealth manager Iveagh, told Reuters.

Adding to investor jitters, overnight HSBC released its China PMI (Purchasing Managers’ Index) data with a reading of 48.3 for June, down from 49.2 in May, indicating Chinese manufacturing may be slowing faster than some analysts had expected.

In morning trading the Australian dollar had recovered some ground against the greenback, climbing back over US92¢ to sit at US92.04¢ at 8am.

But global equities bled, with the Dow closing down 2.34 per cent at 14758.32, and the FTSE dropping a massive 2.98 per cent to close at 6159.51.

European shares fared ever worse, with Germany’s DAX falling 3.28 per cent and France’s CAC index dropping 3.66 per cent.

On Thursday the S&P ASX 200 closed down shares 2.12 per cent at 4758.4. Shares are expected to fall again at open on Friday, with the SPI 200 futures index down 1.7 per cent at 8am.

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