Market dives on US Fed warnings

The market has continued its dismal slide today, down 2.1% to 5530.6 by 12.30pm.

The market is spooked after the US Federal Reserve chairman Ben Bernanke’s warning that the troubled housing sector could cause small-bank failures.

Bernanke told a Senate banking committee that smaller banks would not survive the global credit turmoil. ”I expect there will be some failures,” Bernanke said in answer to a question. ”Among the largest banks I don’t anticipate any serious problems of that sort.”

While worries about a consumer slowdown grow, the appetite for consumer goods continued unabated last year. Electrical goods and furniture retailer Harvey Norman posted a 31.1% jump in first-half net profit, driven by demand for flat-panel TVs, computer games and laptops.

Net profit for the retailer, which has 192 franchised stores, rose to $230.15 million from $180.50 million. But its shares have slumped nearly 30% this year on worries about a slowdown in consumer spending.

Centro Properties Group reported a $1.1 billion first-half loss but says it has received expressions of interest for two of its funds in its bid to raise cash to repay debt.

Meanwhile oil has jumped more than 3% a barrel to a record peak near $US103 after a fire hit a European natural gas terminal and the US dollar fell to a record low.

The Australian dollar opened firmer after stepping past $US0.95 for the first time in 24 years as more evidence emerged of a US economic slowdown. It is now at US0.945.