ASX plunges more than seven per cent at open

The ASX 200 dropped more than seven per cent in the first 15 minutes of trading on Monday. Australian shares reacted negatively to the US Federal Reserve’s rate cut to near zero, which also injected $700 billion into the US economy in the form of treasury bonds and mortgage backed securities. The futures market for the US shows their stocks will open five per cent lower when they begin trading on Monday night Australian time. Speculation is now mounting the Reserve Bank of Australia may need to cut interest rates on Monday or Tuesday by 25 more basis points. If this is done it will bring the cash rate down to 0.25 per cent, and once at that level the RBA will need to introduce quantitative easing. Image: AP

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