Greenspan scares off investors as oil rises

Financial markets were sent reeling yesterday by strong comments from US Federal Reserve chairman Alan Greenspan on America’s ballooning trade deficit and a surge in the price of crude oil.

The Australian dollar was pushed to a nine-month high of US78.37 cents, while shares on Wall Street tumbled more than 1 per cent and gold hit a 16-year high of $US447 an ounce.

Stock watchers say the Australian sharemarket is primed to open 18 points lower tomorrow and could be in for a rocky ride. But they believe the correction will be temporary and the market will resume heading higher into the traditionally strong Christmas trading period.

Dr Greenspan was responsible for much of the turmoil after he told a currency conference in Europe that nations would eventually tire of putting money into US assets to fund its record trade deficit.