Our market is looking at an early sell off this morning after Wall Street saw losses accelerate going into the close this morning.
US shares fell for a third consecutive day as markets prepare for the Federal Reserve’s policy meeting and interest rate decision and the Britain’s referendum on whether to stay in the European Union.
Those fears have seen bond yield fall around the world for high grade government debt, such as US Treasuries, German Bunds, British gilts and Aussie 10 year notes.
The Dow fell 132.86 points, or 0.7%, to close at 17,732.48, with Microsoft leading blue chips lower after its surprise $US26 billion agreed takeover of LinkedIn (See separate story).
The S&P 500 fell 17.01 points, or 0.8%, to finish at 2,079.06, while the Nasdaq Composite dropped 46.11 points, or 0.9%, to close at 4,848.44. The losses followed down days for markets in Europe and especially in Asia.
The news out of China, global investors’ other big concern this year, was also poor, with data showing investment growth cooling in May (see separate story).
US bond yields again eased – to 1.61%, while the greenback was weaker against the yen, which hit trading in Japan. The Aussie dollar traded around 73-80 to 73.90 US cents this morning in Asia.
Source: Global Financial Data, Bloomberg, AMP Capital
Stock markets in Tokyo, Hong Kong and Shanghai all fell heavily by around 2.5%-3.5%.
In Europe, where investors have been preparing for the British vote for months, markets fell to their lowest levels for three months or more. Britain’s FTSE 100, Germany’s DAX, and France’s CAC 40 all fell by 1% or more. The Stoxx 600 Index fell 1.8%.
On currency markets, sterling fell against the dollar after sinking by as much as 3 full cents in value on Friday. The biggest beneficiary of the global moves, however, was the yen, traditionally investors’ first choice in times of financial and economic stress.
The Japanese currency broke past long-term resistance around 106.50 yen per dollar and is up 15% percent this year (it was under 106.20 in Asia this morning), puts more pressure on the Bank of Japan to act against the currency’s strength at its meeting on Thursday.
The bearish mood was visible in commodities markets, where crude oil futures added to Friday’s 3% drop after data showed the US oil drilling rig count rose for the second week in row. In New York, July West Texas Intermediate crude edged down by 19 cents, or 0.4%, to settle at $US48.88 a barrel—the lowest finish for a week. In London, August Brent crude fell 19 cents, or 0.4%, to $US50.35 a barrel, after briefly falling below $US50 a barrel for the first time in a week.
Comex gold hit four-week highs above $US1,280 an ounce, and in fact closed at $1,286.90 an ounce, up $US11 on the day and the highest settlement since May 6. Comex July silver finished at $US17.443 an ounce, up 11.3 cents, or 0.7%.
