The Australian stockmarket resisted following the lead from US and European markets this morning refusing to lay down and die as Wall Street.

Our market fell 3% or more at the opening 162 points was the plunge on the ASX 200 but by 12.30 pm had recovered to be off 108 points or 2%.

That’s still a sharp fall, but in terms of the 3% plus fall seen in the US overnight and the 2% plus falls across Asia, it was a better performance, led by optimists in the resources industry who think that they will be protected from the gloom. Still, well over $30 billion was lost from the market’s value this morning.

Even among the resource stocks, there was damage: BHP and Rio both eased from the week’s highs created by the bullishness about iron ore price rises. The surge in world oil prices past $US140 a barrel had little impact except on producers like Woodside which was up at 12.30 pm.

But our market is still off 16% so far this financial year and we will see a lot more selling over the rest of today and Monday as battered investors crystallise losses in a host of stocks, from the banks, to property companies, trusts, financial engineers and infrastructure stocks.

Local investors will be nervously waiting to see what happens in Europe and the US tonight after last night’s big falls. The 350 point-plus fall in the Dow translated into a 3% drop at the opening here and heavy losses throughout Asia as markets opened for trading in nervous conditions.

The slump came a day after our market and others in Asia rallied on the US Fed’s decision to leave rates alone and its non-statement after the meeting which left the markets wondering just what it wants to see from growth, the financial sector and inflation. Seeing all three are flashpoints, it would seem the markets simply decided to bow to the bears and capitulate.

All those gains since the rescue of Bear Stearns have been erased. It was a day when stocks seemingly capitulated to the bears and any comment about higher oil prices was enough to crush any optimism. Markets have rapidly switched from believing there’s a rebound coming to a very gloomy view of the financial sector with predictions of more write offs and losses in coming months.

The US market has lost 9.4% so far in June and is heading for its worst month since the depression: Asian markets as a whole are heading for the worst June half since 1992 so rapid has been the readjustment and the change in sentiment in the past month.

The resources boom, or rather the iron ore and coal boom, has saved our market from a crushing fall, so far… Meanwhile, the Dow is now at its lowest level since September 2006.