Wall Street plummets:Swan tries to sooth fears

US stocks plunged overnight, with banking stocks falling sharply, and the International Monetary Fund warning that global financial markets are still “fragile.”

The Dow Jones industrial index closed 239.61 points down, at 11,131,08, after sliding sharply throughout the day.

The S&P 500 fell 23.39 points to 1,234,37.

And the tech heavy NASDAQ composite index fell 46.31 points to 2,264.22.

The optimism that had been generated by the rescue of Fannie Mae and Freddie Mac simply evaporated overnight, Australian time.

And oil prices edged higher.

Oil futures rose $US1.53 a barrel to $US124.79.

The Australian dollar was trading at 95.71 US cents early today.

The Federal Treasurer, Wayne Swan, issued a special statement, in response to the warning that the IMF issued, in its Global Financial Stability report.

He said, once again, that Australia is “well placed” to withstand the global financial turmoil, that the IMF had described.

“Our banking sector is taking prudent steps by putting in place provisions to cover off the potential impact of the difficult financial conditions and poor investment decisions of the past,” Swan said.

“The Australian economy and financial sector are better placed than most other countries to withstand the current global economic turmoil.

“We have a strong well-regulated banking sector and a disciplined budget position,” Swan said.

“We are also continuing to receive high prices for our commodity exports.”

He said that while most losses from the US credit crunch now appear to have been realised, the US economy and its housing market are still weak.

And structured financial markets “remain effectively shut,” Swan said.

Swan said Australia fully supports the efforts the IMF is making to promote reforms that would strengthen international markets.