A disappointing Spanish sovereign debt auction set a negative tone for European investors as fears of recession in the region gain momentum.
The FTSE (-2.30%), DAX (-2.84%), and CAC (-2.74%) all had values slashed amid the backdrop of the European Central Bank’s decision to keep interest rates at their current low and data suggesting that private sector activity was well down on previous months.
The ripples were felt on Wall Street, where all the major indices sank. The tech-heavy Nasdaq experienced the biggest loss, falling 1.46%. The DOW, which had been creeping up towards the 13,500 mark, cut 0.9% to close at 13,074.83.
International Trade and Goods and Services data prompted investors to sell-off during yesterday’s trade session, but at the close the losses were minimal. The ASX200 snipped 0.07% off its value to 4333.9 points, while the All Ords index retreated 0.12% to 4419 points.
The Aussie dollar headed lower after weak trade data and the unflattering results from the sale of 2.6 billion euros worth of Spanish Bonds at auction overnight. This morning, it was trading at 102.7 US cents.
The bond auction also placed addition pressure on the Euro and Pound, which lost value against a strengthening US dollar.
Industrial and Precious Metals took a hammering overnight, with significant drops across both sectors.
Gold prices plunged nearly $US60 dollars (3.5%) to $US1614 as investors dumped interests in the precious metal following the Federal Reserve’s reluctance to commit to any further economic stimulus. This latest fall has erased most of the gains for Gold in 2012 to date.
Silver was also bashed by investors as it tumbled nearly 7% to US$31.04.
Base metals like Copper (-3.1%), Zinc (-2.30%), and Lead (-2.9%), also took a slide.
Oil prices continued to fall, with a report indicating US stockpiles are high and more indications that Europe is heading for recession dragging the price down to $US101.47.
The US focus will now be on Jobless Claims figures tonight and an Employment Situation report later in the week.
The AUD continues to fall; do you think it will head towards parity with the US currency in the next few weeks?