All those investors who looked longingly at their investment returns for the 2007 financial year, with rises of 12%, 15%, 18% or more, should look away from this story.

The market has given up all those gains at the end of 2007 in April, May and June and fallen to four month low this morning. It peaked in mid April at just over 6,400 points and is now down almost 600 points from that. That’s getting towards 9% which is almost correction territory, according to market pundits.

The markets was off another 2% this morning and is now a couple of hundred points away from where it was at the start of the year. The broader All Ordinaries Index was off 124 points at 5828 at 11.30 am and the narrower ASX/200 Index was down 122 points at 5842.

The Australian dollar has also been sold off again today. It peaked this week at 85.05 USc Monday afternoon in the wake of the Reserve Bank’s hawkish statement on interest rates and inflation, and was trading at 83.24 USc a short while ago, and heading lower.

The stockmarket had a big fall in March but it then rebounded and hit its all time high July 24 for the ASX 200.

There was also a big correction between May and October-November last year on the back of the sharp rise in oil and metal prices, the Middle East tension and the fighting between Israel-and Hezbollah.

After spending more than five months regaining its May, 2006 level, the market powered onwards and upwards, fuelled by the easy credit, resources and private equity booms.

This time there are no underlying factors that can help the market at the moment because the uncertainty strikes right at the heart of what financial markets prize most of all: trust and confidence, and liquidity. All three are in very short supply at the moment, or have vanished.

Not even momentum from all the billions of dollars in super fund cash flows waiting to be invested, or the resources boom, can produce a change in sentiment at the moment.