* US stock markets plunged from the open overnight, as eurozone debt crisis dominated the investor “risk-off” mood.
* European stock markets sold-off from the outset on continued fears about the helath of the Spanish banking system. .
* Asian stock markets fell yesterday, as the Spanish banking system crisis worsened and the Chinese government ratcheted back the hopes for further stimulus.
* Commodities prices lower, with Gold prices traded around $US1,562 while crude-oil closed around $US87.
The Australian market is expected to remain under selling pressure today, as traders again had worrisome leads from overseas. Markets sold-down from the outset in the European and the US markets, as US sellers turned “risk-off”.
The SPI Futures is trading below the key pivot level of 4080, ended down -1.1% (or -43 points) at 4,043. The key levels for our index today are 4000 to 4080.
See below for ASX listed companies in the news today.
Economics News Today
* May Australian PCI
* May Unemployment Report (current 4.9%)
* May Official Reserve Assets Reserves ($US49.8 billion).
U.S. Markets
US stock markets plunged from the open overnight, as eurozone debt crisis dominated the investor “risk-off” mood. Renewed fears of over the health of Spanish banks fuelled concerns over the eurozone debt crisis and contagion.
The Dow Jones Industrial Index had its worst single day percentage fall since mid-April. The Dow has lost -6% so far this month and has only finished higher 5-days this month. In the broader markets S&P 500 index and the tech-heavy Nasdaq closed lower, and the S&P500 is on track for its worst monthly performance since last September.
All 10 S&P sectors closed lower led by the Energy, Financials, Materials and the Industrials sectors. Growth sensitive stocks suffered the largest losses, while domestically there was disappointment as US economic data showed pending home sales for April declining again.
The US dollar index continue to surge higher closing at 83.07 on the session. This has led to base metals closing sharply lower overnight, with many falling to multi-month lows. Copper fell again and is trading at 5-month lows into an area that has been a key support level for the red metal in recent months. Crude-Oil futures fell over 3% to finish at their lowest level in 7-months as the Spanish banking crisis worsens. Gold prices bucked the trend rising but still at a critical support level.
All ten company groups that make up the S&P index traded lower, with Materials down -1.8%, Energy sector was down -3.1%, Financials sector down -2.3%, Industrials sector was down -1.7%, Technology was down -0.6%, while Consumer Staples were down -1.6%.
The Dow Jones closed down – 1.3% (or -160 points) at 12,419, the S&P 500 index down -1.4% (or -19 points) at 1,313, the Nasdaq ended down -1.2% (or -33 points) at 2,837 and the smaller cap Russell 2000 was down -1.9%.
European Markets
European stock markets sold-off from the outset on continued fears about the helath of the Spanish banking system. The benchmark Stoxx Europe 600 index fell -1.5% and is at its fourth lowest close of the year. The sentiment was also hammered by the Egan Jones Ratings firm that downgraded Spanish debt to B from BB-minus with a negative outlook after Tuesday’s market close.
Spain has one of the weakest markets down -2.6% and is now trading at 9-year lows, as the Spanish banking system threatens to implode, as the cost of borrowing exceed 6.7%. The ECB also reported that the Spanish banking sector, retail and corporate deposits at its banks fell in April to the lowest level since the start of the eurozone crisis. Also adding to the selling pressure, the European Commission said its economic sentiment indicator for the currency area fell to 90.6 in May (down from 92.9 in April), the lowest level in 31 months.
In Germany 2-year note yield is at zero percent! The euro dollar is at $US1.24, its weakest level in 2-years (July 2010). Italian traders also headed for the exits pushing the markets down -1.8% and in Greece the market plunged another -3.2%. Investors rushed to the exits taking “risk-off” and pursuing safe havens like the US Treasuries and German Bonds, after the European Central Bank said NO! to a Spanish plan to use central bank funds to recapitalise one of its troubled lenders.
Traders ignored comments from the European Commission that the eurozone’s permanent rescue fund (EFSF) may be given permission to directly recapitalise the currency union’s failing banks, saying it would first need the direct agreement of Germany and the European Central Bank.
In the UK the London the FTSE 100 index fell again and is down -7.7% for May and is on track to record its biggest monthly fall since February 2009. Financials, Energy and mining stocks suffered from the selling.
In London the FTSE 100 index last closed down -1.7% (or -94 points) at 5,297, the German DAX was closed down -1.8% (or -116 points) at 6,281, while in France the CAC was closed down -2.2% (or -69 points) at 3,016, Spain closed down -2.6% and Italy closed down -1.8%. Greece -3.2%.
Asian Markets
Asian stock markets fell yesterday, as the Spanish banking system crisis worsened and the Chinese government ratcheted back the hopes for further stimulus.
Markets across the region traded lower and traders took “risk-off” taking short-term profits from the short rally from earlier in the week. Growth-sensitive stocks gave back some of there recent gains and investor were also spooked after Spain had its credit rating was downgraded by Egan-Jones Ratings. Chinese infrastructure companies fell as did Chinese resource and energy companies.
In China the SSE Composite closed down -0.2% (or -5 points) at 2,385, while in Hong Kong the Hang Seng Index closed down -1.9% (or -365 points) at 18,690 and in Japan the Nikkei 225 Index was down -0.3% (or -24 points) at 8,633, South Korean KOSPI was -0.3% for the session, while the Indian market closed down -0.8%.
Commodities
The Dollar Index was higher at 83.07 on a lower Euro, while the Australian Dollar last traded lower at 97.06. Commodities prices traded lower.
For the session the Benchmark crude NYMEX for June delivery was down -2.4% settled at $US87.39. Copper prices are looking for key support level as Copper for July delivery was down -3.7% (or -3.3 cents) at $US3.3775, while July Gold was up 0.9% (or -$US13.40) at $US1,562.10.
ASX News Today
AAC – Australian Agricultural Company the cattle producer, has bought the site for its proposed $83 million abattoir in Darwin.
AGK – AGL Energy’s $448 million takeover of the Australia’s third largest coal fired power station has received final approval.
EGP – Billionaire James Packer has stepped up his push into the Sydney casino market by moving to install former Victorian premier Jeff Kennett on Echo Entertainment Group’s board.
FXJ – Fairfax Media journalists at have voted to go on strike for 36 hours over the outsourcing of 66 editorial production jobs to NZ.
ORG – Origin Energy has blamed a global over-supply of solar cells for a decision to cancel production of panels in the United States.
PRG – Programmed Maintenance Services almost tripled its profit in the last 12 months due to its exposure to the resources sector, and expects modest earnings growth in the year ahead.
SYR – Syrah Resources is in a trading halt pending the release of an announcement to the market in relation to interim drilling results on its 100%-owned Balama Graphite Project.
TZL – TZ Limited s company chaired by high profile Mark Bouris lost $15.3 million in market value after it missed out on a lucrative deal with Australia Post.
VTA – Viterra shareholders have approved the takeover of the agribusiness, which has operations in Australia, by global commodities giant Glencore.
WES – Wesfarmers says Target wants to shake off its budget image and become a cool brand among the teens and tweens.
WDC – Westfield the shopping centre giant says it is confident it can attain its EUR1 billion euros in sales target in Milan despite continuing financial crisis in Europe.WPL – Woodside Petroleum recently reported its first quarter revenue was up 20 percent to $US1.2 billion, despite a 10 percent fall in production due to the impact of cyclones.
Market Summary
US & UK/Europe – sharply lower
