Australian Stock Futures, Dollar Plunge as U.S. Bailout Falters

By Shani Raja

Sept. 30 (Bloomberg) -- Australian stock futures and the local dollar tumbled after the U.S. House of Representatives rejected a $700 billion plan to rescue the financial system.

American depositary receipts of BHP Billiton Ltd., the world's largest mining company, dived 14 percent. U.S. traded shares of Westpac Banking Corp., Australia's second-biggest by market value, fell 9.1 percent.

The S&P/ASX 200 Index futures contract due in December plunged 7 percent to 4,510 at 6:56 a.m. in Sydney and the Australian currency fell 2.3 percent.

``Volatility in the market has been notched up to a new high,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``This package is critical and it seems to be getting bogged down for political reasons. Credit markets are dysfunctional at the moment and if they aren't normalized quickly we have a serious problem.''

The Standard & Poor's 500 Index tumbled the most since the 1987 crash yesterday and the Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in value was erased from American equities. The MSCI World Index of 23 developed markets slid 6.9 percent, the most in 21 years.

Australia's benchmark S&P/ASX 200 Index slumped 97.40 points, or 2 percent, to 4,807.40 yesterday. The index has tumbled 30 percent from its November 2007 record as global credit markets seized up amid the U.S. subprime mortgage crisis.

The Australian dollar fell 2.3 percent to 79.65 U.S. cents from 81.50 cents in late Asian trading yesterday.

Tighter Credit

Australian banks' funding costs jumped as money markets tightened. The spread between one-year interbank rates and the one-year Australian government bond rose 12.6 basis points, or 0.126 percentage point, to 1.28 percentage point at 8:32 a.m. in Sydney, the widest since April 17, based on Bloomberg data.

The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.

Mining shares: A measure of six metals traded on the London Metal Exchange dropped 4 percent. Zinc fell 4.4 percent and copper 4.9 percent and nickel 3.5 percent.

American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, dived 14 percent to the equivalent of A$31.67 a share in New York, A$2.57 lower than the A$34.24 close in Sydney.

Rio Tinto Group (RIO AU) declined A$5.50, or 5.5 percent, to A$95.50.

Oil companies: Crude oil for November delivery fell $10.52, or 9.8 percent, to settle at $96.37 a barrel at 2:42 p.m. on the New York Mercantile Exchange. The drop was the biggest in percentage terms since Nov. 15, 2001, and the largest dollar decline since Jan.

Woodside Petroleum Ltd. (WPL AU), operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, declined A$1.25, or 2.2 percent, to A$54.55.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.