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Global share market correction takes hold -

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SHANE MCLEOD: There has been a rout on global share markets as worries about the US economy

On Wall Street the Dow Jones Index fell by 2 per cent; the Nasdaq lost 3 per cent after bad
economic data came out.

The local share market has also dropped 2 per cent as has Japan's main index the Nikkei.

So, is this the correction we had to have?

Finance reporter Sue Lannin has more.

SUE LANNIN: The correction that many feared was on its way seems to be here. After big gains during
the September quarter for global share markets, the bulls have run out of breath.

Overnight Wall Street had its worst one day fall in three months. The Dow Jones Industrial Average
lost 2 per cent or 203 points to end at 9,509.

A drop in manufacturing activity prompted the jitters. The Institute for Supply Management says its
monthly index dropped slightly from August to September. More claims for unemployment benefits also
rattled investors.

European share markets dropped too as unemployment rose across the Eurozone. The Australian market
has fallen in line with the global rout.

Glenn Roswell, the managing director at stockbroker BBY says the correction has arrived.

GLENN ROSWELL: It's well overdue for a pullback in the market. Seasonally it's the right time of
the year. We've had a very strong run from the lows we saw in the markets earlier this year in
February/March without really much respite along the way. We're overdue for a correction that
magnitude could be as much as 7.5 per cent from the recent highs.

In the terms of a year-end target that we'd set for the Australian market we did have 4,250 as a
reasonably target by year end. The market today is back to down almost 2 per cent so we could see
another 300 or 400 points downside over the coming weeks.

SUE LANNIN: That's quite a lot.

GLENN ROSWELL: It sounds like a lot but relative to where we've started the year it's not that much
and in the scheme of things we're quite confident on growth for Australia and for the world for
next calendar year so the target we set for the ASX 200 at the end of calendar 2010 is 4,950.

If the market does pull back to that 4,250/4,350 area that's a reasonable gain over the next 12 or
15 months.

SUE LANNIN: Do you think that 20 per cent rise we saw over the September quarter in the Australian
market was just too fast, too far too fast?

GLENN ROSWELL: Absolutely. It represented I think people that probably had their heads in the sand
for the first six months of the year saying notwithstanding the market was exceptionally cheap and
you had to really go back to the early '80s or the '30s to find that sort of valuation entry point
for a market previously.

Those people stuck their head in the sand and failed to get on board the market when markets
started to respond to the global stimulus packages that had been announced around the world. And I
guess they probably panicked in the September quarter.

SUE LANNIN: Now the markets are poised for tonight's figures - the latest jobs data from the US.

Investment bank Goldman Sachs is predicting that 250,000 jobs could go and the unemployment rate
could rise from the current 9.7 per cent.

But Martin Lakos the head of Macquarie Private Wealth doesn't think the Australian market will fall
so much. In fact he thinks it will rise to around 5,000 points by the end of the year.

MARTIN LAKOS: What's really driving markets at the moment is still that we're in the early stages
of economic recovery in the US, UK and Europe; not to mention of course that we've got strong
growth coming out of China. And here in Australia in fact you know we've avoided a recession. And
corporate Australia is actually in very good shape and we're starting to see a very strong recovery
in earnings.

Now that's not going to suddenly stop. So we're forecasting to see earnings continue to grow to the
point where for 2011 we see almost 30 per cent increase in earnings from the previous year and
that's starting to get factored into the market. But it's not yet fully factored in so we are
looking for further upside. So it's a key driver, this earnings growth.

SHANE MCLEOD: Martin Lakos from Macquarie Private Wealth ending that report by Sue Lannin.