MARKET SNAPSHOT: U.S. Stocks Seek Relief From G7

By Nick Godt

U.S. stocks will enter next week with investors either comforted or disappointed by the meeting of the Group of Seven finance ministers and central bankers, who have gathered in Washington D.C. to address the global financial meltdown and its implications for the world's economies.

"I don't know what the G7 can do exactly," said Robert Pavlik, investment strategist at Oaktree Asset Management. "But if they can come out with a positive statement, after all this is a gathering of some of the most qualified people out there, then that will help market psychology."

Several hours after the close of trading Friday, G7 ministers and central bank governors pledged to work together to make sure that large important financial institutions do not fail. In a brief "plan of action" released after their meeting, the G7 said that the current market turmoil calls for exceptional action.

At the top of the list were unfreezing credit and money markets, ensuring banks can raise capital from the private sector, ensuring that deposit insurance regimes were robust, and repairing secondary mortgage markets where appropriate.

UPDATE: RBA slashes rates by full point, says big move necessary

By Chris Oliver

HONG KONG (Dow Jones) -- The Reserve Bank of Australia cut its benchmark policy interest rate by a percentage point to 6.0% from 7.0%, citing disarray in global financial markets and mounting evidence of a sudden deceleration in economic growth among Australia's major trading partners in Asia.

"The Board judged that a material change to the balance of risks surrounding the outlook had occurred, requiring a significantly less restrictive stance of monetary policy," Reserve Bank Governor Glenn Stevens said in a statement Tuesday accompanying the rate decision.

Stevens said conditions in international financial markets had taken a significant turn for the worse in September, adding that obtaining financing is likely to be difficult around the world for some time to come in spite of efforts by central banks to unfreeze credit markets through liquidity injections.

"Economic activity in the major countries is also weakening, and evidence is accumulating of a significant moderation in growth in Australia's trading partners in Asia," Stevens said.

The governor also said consumer price inflation will likely accelerate to 5% on year in September but could begin easing in 2009.

"The recent deterioration in prospects for global growth, together with much more difficult market conditions even for creditworthy borrowers, now present the risk that demand and output could be significantly weaker than earlier expected. Should that occur, inflation would most likely fall faster than earlier forecast," Stevens said.