Investors called an emphatic end to this year’s 30% rise in the sharemarket
yesterday as a flood of stop-loss sell orders helped fuel the biggest one-day
fall in share prices for three years, says Kevin Andrusiak in The Australian. The All Ordinaries index plunged 2.15% as investors moved to
lock in gains. The selling had no obvious trigger, but came amid inflation warnings from the US and a big fall
in Australian building approvals.

I suspect that the big force behind the fall was
something less serious and more satisfying for investors, says Malcolm Maiden in The Age – profit-taking. At any
rate, the conditions for a sharemarket rout simply do not exist. Not yet,
anyway. But the superstitious among us
will be thinking back to 1987, says Michael West in The Australian. Then, the market rallied for 11 consecutive
quarters before the October crash. A return to sane valuations is more likely. But if the
threat of spiralling US debt or higher oil prices and interest rates trigger a panicked
decline, things could turn nasty.

But not even the triple whammy of surprisingly weak building
approvals data, the stock market fall and a
broadly stronger US dollar was sufficient to knock the Aussie dollar off its
perch, says Jim Parker in the Financial
Review (not online). It still fetched US75.97cents late yesterday, only
slightly down from the previous day. No such luck for Babcock & Brown stocks, says Robert Clow in The Australian – in free fall yesterday
after a report from Capital Partners suggested the stock was
worth only a third of the market value. Babcock fell from $21.25 on Monday
to $19.68 on Tuesday and $17.56 at yesterday’s close – down $2.11 on the day.

As for Telstra shares, it was only a matter of time before one of the big
investment banks dipped its toe into the treacherous waters and decided
it was safe enough to upgrade its investment view, says Elizabeth Knight in The Sydney Morning Herald. CSFB took the plunge this week and rated the
stock an “outperform” – gambling on the management’s strategic review and what
chief Sol Trujillo will say in his big announcement next month.

One man who doesn’t have to worry about the Telstra float is
the telco’s erstwhile leader, Dr Zygmunt Switkowski, says James Chessell in the SMH.
A guest
of honour at the National Press Club yesterday, he was asked by a
reporter: “Would
you recommend Telstra shares to Phil Burgess’s mother?” To which Ziggy
rejoined: “When I was in the role of Telstra I didn’t commentate upon
Telstra shares and I
won’t do so today.” What Switkowski will
“commentate upon” are cross-media laws, says Stephen Bartholomeusz in The Smage. Hence his impassioned and compelling case for the federal government
to abandon its policy of appeasement on media reform and make a dash for the
digital age, in his speech to the Press Club yesterday.

And Microsoft’s arch-rival Google has announced an alliance with Sun to provide
an alternative to the monopoly software provider’s Office applications, says
Mark Jones in the Financial Review
(not online). Google
will give away word-processing and spreadsheet software, the sale of which
generated some $US11 billion for Microsoft last year. But Australian banks like NAB,
in the midst of massive, multimillion-dollar upgrades, say they’ll stick with Microsoft yet.

On Wall Street, US stocks tumbled to their worst levels in
three months, as concern about inflation, the prospect of higher interest rates
and slowing economic growth took the shine off a fresh pullback in crude-oil
prices. The Dow closed down 123.75 points 10,317.36. MarketWatch has the full report here.