Gold soared, oil plunged, bond yields slid as prices soared, investors fretted and stocks fell into a global bear market in another day of dramatic trading.
European markets lost a nasty 3.5%, the Dow lost 1.6%, the S&P 500, 1.4% and Nasdaq just 0.4%. That was a big improvement on losses double those levels earlier in the session when Wall Street was sliding.
The Swedish central bank contributed to much of the drama by cutting its key interest by 0.15 points to a negative 0.5%, refocusing investor attention on bank and financial shares in Europe, and then the US.
The Bank of Japan didn’t help matters either by appearing to intervene to try and halt the rise of the yen against the greenback – it worked, for a time, but added uncertainty to markets. The yen still ended higher, but our currency remained around the 71 US cent mark
Gold soared, jumping $US50 an ounce and more at one stage to well above $US1,263 an ounce, while oil slumped to 13 year lows, making a mockery of a Wall Street Journal report suggesting Opec was considering production cuts.
European share markets slumped – Milan by nearly 6%, France by more than 5%, Germany by close to 3%, while London fell 2.4% to lows not seen since 2012.
Wall St opened in the red and fell almost 400 points before cutting its losses in the last hour of trading.
Our market will start with losses of around 50 points – earlier it was looking like a 70 plus point fall on the ASX 200.
Bond yields fell sharply in the UK, US and Europe – the yield on 10-year UK government bond reached an all-time low of 1.22%, the yield on the 10 year US bond touched 1.53%, its lowest level since August 2012.
The yield on Japanese 10 year bonds ’rose’ to 0.1% from negative 0.1%. Yields on Australian 10 year Government bonds were trading around 2.37% this morning – 12 points away from the all time lows of April last year.
Fed chair, Janet Yellen, played down the chances of the US central bank following the European Central Bank and the Bank of Japan by lowering rates into negative territory but worried markets by acknowledged that the option remains on the table.
Her comments to the Senate came after Sweden’s central bank pushed its key rate deeper into negative territory as it prepares for a similar move by the European Central Bank in the next month or so.
The Financial Times said the FTSE All-World stock index entered bear market territory after falling 20% from last year’s peak. The Stoxx 600 European banks index dropped 6.5% to the lowest level since the eurozone debt crisis, and shares of big US banks also fell.
Oil futures fell again overnight, with West Texas Intermediate crude futures ending at their lowest settlement in nearly 13 years. March WTI crude fell by $US1.24, or 4.5%, to settle at $US26.21 a barrel in New York after touching a low of $US26.05 a barrel. That was the lowest settlement since May 6, 2003, according to Marketwatch. In London, April Brent crude lost 78 cents, or 2.5%, to $US30.06 a barrel.
Gold futures jumped by more than $US50 an ounce to settle at the highest level in New York, but copper fell. Comex gold for April delivery jumped $US53.20, or 4.5%, to settle at $US1,247.80 an ounce after touching a high of $1,263.90. It was the highest settlement since February 5.
Comex March silver rose 51.2 cents, or 3.4%, to finish $US15.794 an ounce, but Comex March copper futures lost 2.1 cents, or 1%, to close at $US2.007 a pound, and looking to go under $US2 a pound at the next opportunity.
