Wall Street might have halved its losses in the final half hour of trading this morning, but the ASX will start with a nasty 80 point loss as global markets were once again rattled by falling financial stocks and tottering US tech giants.
Gold though soared, rising briefly above $US1,200 an ounce before easing back to trade around $US1,291 – up $US33 an ounce from Friday’s close, and up 12% so far this year (and more than 6% in February).
Oil though retraced, losing 3%, copper eased, but iron ore rose half a per cent to a new four month high of $US45.93.
The US dollar was volatile, falling, rising, and easing – the Aussie dollar rose back above 71 US cents, then retreated.
The Dow lost 1.1%, the S&P 500 fell 1.4% and the Nasdaq dropped 1.8%. At one stage the Dow was down nearly 400 points in late afternoon trading before sentiment turned.
Government bond yields tumbled – the key US 10 year security saw a new year low of 1.73% at the height of the volatility overnight. The yield ended around 1.734% just after 8 am this morning which is cloes to a one year low.
With China and most other Asian markets closed for the New Year holiday (but not Australia, which fell 0.8%, and Japan, where the Nikkei rose 1.2%) many investors had thought markets would be relatively quiet.
But that was not to be the case once trading got to Europe and investors started selling, led by financials, such as bank stocks.
That saw giants like mighty Deutsche, Germany’s biggest bank, lose 10% of its value as it had to explain it had enough money to make coupon payments on some of its listed bonds. Commerzbank, another big German lender slumped 9.5%.
All up the Euro Stoxx 600 index slumped 3.6%, to the lowest level since October 16, 2014. The Stoxx banking index plunged 6%. as fears grew about the stability of the Greek and Italian banking sectors.
The Greek market lost 7.9% and is now at its lowest level since 1990 (even lower than during the various financial crises last year).
Germany’s DAX 30 index lost 3.3% to 8,979.36, officially and in bear market territory, with a loss of 21.11% from its November 30, 2015, high.
France’s CAC 40 index lost 3.2% to 4,066.31, while the London’s FTSE 100 index shed 2.7% to end at 5,689.36. Markets in Italy and Spain lost more than 4%. US tech stocks and financial sold off – Gold Sachs was down more than 6% at one stage and closed down more than 4%, while Twitter shares hit an all time low of $US14.90 at the close of trading.
