Share markets still looking for the floor

The US banking crisis is still casting a dark shadow over the world’s share markets.

The Dow Jones industrial index closed more than 100 points down Friday, US time, reaching another new six year low of 7,365.67 points.

Europe was much the same, with the DJ Stoxx index falling 71.80 points over the weekend, Australian time, to  close at 1,814.48 points.

Shares in the Royal Bank of Scotland plunged almost 12 per cent, on a single day’s trading, in that time.

Even Australia’s Treasurer, Wayne Swan, has responded cautiously to the bank rescue package, that the US Treasury Secretary, Timothy Geithner, announced last week, giving it heavily qualified praise.

In a television interview yesterday, Mr Swan described Secretary Geithner’s package as “a very important step along the road.

“But there’s more work to be done so that we can get a coordinated international response (to the global economic crisis),”  Mr Swan said.

“Particularly when it comes to financial system stability,” he added.

It was market disappointment, with the Geithner banking package, that set off the latest bout of weak trading, on world share markets last week.

That’s understandable as one US economist Nouriel Roubini now estimates that total US bank losses, so far, will add up to $US1.8 trillion, a figure that puts President Obama’s $US 787  billion stimulus package into the shade.

Mr Swan also said that both he and the Prime Minister Kevin Rudd are looking forward to seeing some substantial progress at  G20  finance and leaders’ meetings, that are scheduled to place in late March and early April.

Meanwhile, as Australia’s Reserve Bank Governor, Glenn Stevens, admitted last Friday, the short term outlook for Australia remains weak.

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