Almost 11% of value lost, worst month for 20 years

Australian stocks have had their worst month in 20 years, a volatile period of uncertainty and extremes that has eliminated almost 11 per cent of the market's value.
Yesterday's sharemarket action was a case in point. The market "began the day like an angry man trying to deck anyone who got in its way", wrote Richard Coppleson, a Goldman Sachs JBWere institutional sales trader.
The S&P/ASX 200 Index ended the day 31.6 points higher, at 5650.3 points. But initially it keeled over, falling 170 points, or 3 per cent, within half an hour of opening.
This was despite another interest rate cut from the Federal Open Market Committee, which has slashed US interest rates from 4.25 per cent to 3 per cent in the space of 10 days, the biggest cut in such a short period in its history.
"Today's policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity," was the committee's rationale.
But the expected 50 basis point rate cut could not sustain US markets. The S&P 500 Index closed 0.5 per cent lower after the Fitch Ratings agency cut its rating on the US bond insurer Financial Guaranty. The lower rating casts doubt on the securities that the insurer guarantees.
Another ratings agency, Standard & Poor's, also said rising defaults would force it to revise ratings on $US534 billion ($601 billion) in mortgage-related securities.
The Australian dollar, which had risen to a 12-day high of US90.16c after the interest rate cut, reversed course. In four hours it lost almost US2c, to a low of US88.2.
With Australian interest rates tipped to rise from 6.75 per cent to 7 per cent on Tuesday and lower US interest rates, RBC Capital Markets' senior currency strategist, Sue Trinh, said the Australian dollar should strengthen, from a "pure interest rate differential point of view". But the crisis in financial markets meant the dollar could swing between US84c and US91c for the next three to six months, she said.
European markets were muted last night. France's CAC40 Index rose, but Germany's DAX Index had a minimal fall. Britain's FTSE headed lower.
In Australia, the failure of the broker Tricom to meet settlement deadlines on the Australian Securities Exchange rattled investors, as did reports that the company would have to sell hundreds of millions worth of assets to satisfy its financiers. But Rio Tinto lifted the market, gaining $8.66, or 7.6 per cent, to $123.
The Tolhurst senior investment adviser Mark Goulopoulos said the market was flat at 4pm but rose dramatically in the final 10 minutes, as traders squared off their books.
"It just shows how frenzied the trading is," he said.
Woolworths fell 70c to $28.80 after lower-than-expected earnings prompted ABN Amro to lower its 12-month price target from $37.50 to $34.80. Citigroup's target was reduced, from $29.50 to $29. The investment bank Babcock&Brown lost 92c to $17.95 and B&B Power fell 12c to $1.87.
Last month, the diversified financial MFS, Centro Retail, AED Oil and Allco Finance were the ASX 200's worst performers, down between 77.5 per cent and 46.1 per cent. Centennial Coal, the rare-earths miner Lynas Corporation and Sino Gold gained between 17.4 and 10.1 per cent.