European sharemarkets fell, Wall Street finished higher from its lows and commodity prices sold off for another day – and finally the dopey Australian investors focuses on the real threat to local share prices.
Iron ore prices plunged more than 5% for a second day, oil prices steadied, but remained low and gold, silver and copper all fell out of bed.
The Aussie dollar hit a new six year low – falling below 74 US cents for the first time and touching 73.98 US cents, before recovering a touch.
As a result instead of starting higher and running up in a huge relief rally, as we saw yesterday (investors stupidly ignored the big slump in key commodity prices and another bad day for Chinese sharemarkets), the future market has pencilled in a fall of 17 to 20 points at the opening.
Greece hasn’t helped nerves this morning (no action yesterday in the Greek finances drama was seen as ‘good’ news yesterday by silly optimists). The Greek negotiating team (including the Prime Minister) arrived for talks in Brussels with the rest of the eurozone and EU and presented nothing concrete, exasperating its partners once again.
They responded late Tuesday night by giving Greece an ultimatum – the country has until Sunday to reach a new debt agreement, or face bankruptcy and the collapse of its banking system. The leaders of all 28 EU members will meet in Brussels on Sunday night, our time.
But oddly, there was also confidence that the Greeks could come up with a new package by tonight, our time. How odd.
The Greek stockmarket remains closed as do the banks (presumably until early next week).
But here, local investors will finally focus on the growing slide in iron ore prices which fell below $US50 a tonne for the first time since April, thanks to weak demand for steel in China and the gathering concerns about the damage China’s share market rout could cause.
The spot price of iron ore sank 5.1% to $US49.60 a tonne overnight Tuesday, falling for a ninth day, according the Metal Bulletin. Prices are now down 21% from the recent peak and the way they are falling, they could test that decade low of $US47.02 a tonne (hit on April 2) early next week.
Gold futures slid more than $US20 an ounce overnight Tuesday, thanks to a strong rise by the US dollar (which sent our dollar lower).
Gold prices fell to their lowest since the middle of March and the continuing Greek crisis has failed to ignite demand for the metal, nor have the problems in the Chinese sharemarkets.
Other metals also took a hit, with silver leading the losses and copper also lower (along with a string of other metals and soft commodity prices).
Comex gold for August delivery in New York plunged $US20.60, or 1.8%, to settle at $US1,152.60 an ounce.
September silver sank 78.4 cents, or 5%, to settle at $US14.69 an ounce, with the lowest settlement since August, 2009.
And September copper fell 9.15 cents, or 3.6%, to $US2.447 a pound after the 10% slide on Monday.
US crude for August delivery fell 20 cents, or 0.4%, to settle at $US52.33 a barrel in New York, after earlier sinking below $US51. It fell 7.7% on Monday. It rose in electronic trading after settlement in the US and in early Asian dealings.
Brent crude rose 31 cents, or 0.6%, to end at $US56.85 a barrel.
