Catch up was a bit of an understatement for the markets yesterday here and in Asia after the sharp sell-off in Europe and the US last Friday.
Leaping off a small cliff might have been a bit more accurate with our market opening lower and then continuing to fall during the day as those fears about Greece, the euro, the eurozone’s stability and anything else driving prices lower.
The Greek situation remains confused, with lot’s of speculation, but little concrete news, the results of the debt swap still unknown. They could tell us if Greece will survive without defaulting.
The Australian dollar fell under $US1.03 and ended at $US1.0294 in New York.
It traded up to $US1.0340 in early Asian trading after the late rally in New York.
It had been as high as 76.94 euro cents, but eased to close at 75.68.
Asian stocks plunged yesterday, with some shares hitting multi-year lows and futures trading had loses of 2% for European markets, which had fallen by 2% to 4% on Friday.
Those losses in Europe transpired for a second day with London down 1.6%, Paris off 4% and Germany down 2.3%. Italy’s market lost 3.9%.
The US opened with steep losses, but rebounded during the day and closed with a small gain, which should settle local and Asian markets for a while today.
The Australian market lost around $45 billion in value yesterday and the major indices are within sight of the 4,000 point line, which is a major support zone.
It was the market’s second biggest one day fall since the GFC in late 2008.
At the close, the ASX200 was down 152.9 points, or 3.6%, at 4041.8, while the All Ordinaries index slumped 148.5 points, or 3.5%, to 4128.9.
All sectors were deep in the red, with financials plunging 3.9% on fears about the euro and possibly higher funding costs; materials lost 3.7% because it includes miners and commodity plays and energy losing 4.9% as oil prices continued falling in Asian trading yesterday, losing 2% to around $US85.60 a barrel.
Oil later recovered to close up 92 cents at $US88.80 a barrel in New York.
Gold fell, despite its reputation as a safe haven in times of stress: it fell $US7 an ounce in Asian dealings to around $US1,853 an ounce.
It further fell in Europe and the US to settle at $US1,815 an ounce, off $US43 an ounce, or a fall of 2.3%, from last Friday.
Gold edged up to $US1,817 an ounce in early Asian trading this morning.
Comex silver for December delivery fell 85c, or 0.4%, to $US41.11 an ounce in Asia. It fell further in Europe and the US in sympathy with gold to end at $US40.17 an ounce, down more than $US1.20 an ounce since last Friday.
Comex December copper dropped more than 4c, or 1%, to $US3.95 a pound and settled slightly higher at $US3.97 a pound for a loss of around 3c..
Australia was the worst performer in Asia with a 3.6% drop, Hong Kong was down 3.8%, Tokyo 2.3% and Singapore 2.3%. Tokyo ended at its lowest level for six months.
Indian markets fell 2.1% as industrial production rose by less than forecast ahead of an expected interest rate rise on Friday.
South Korean, Taiwanese and mainland Chinese markets were closed for holidays. Lucky them.
Reuters reported that EU economy commissioner Olli Rehn said on Sunday a team of experts would head to Athens in the next few days to look at a new tranche of Greece’s 2010 rescue package. The team had been due to return overnight.
"Once Greece meets the conditions, I expect the review by the troika could be concluded by the end of September," he said, referring to the European Commission, the European Central Bank and International Monetary Fund.
The team from the three groups left Greece the Friday before last after accusing Greece of dragging its feet on finding new spending cuts to fill a black hole in the proposed budget.
That hole was due to the current recession being deeper and longer lasting than forecast even two months ago.
While Greece on Sunday announced two billion euros ($A2.62 billion) in new budget cuts demanded by the EU and the IMF for its rescue package, that wasn’t enough for the markets, thanks to more intemperate talk in Germany.
Germany’s Economy Minister Philipp Roesler was reported to have said in a column to be published on Monday, that Europe could no longer rule out an "orderly default" for Greece as it struggles with it crippling debt.
That was after the well connected German magazine Der Spiegel reported on Saturday that the German government was preparing two contingency plans in the event of a Greek default.
These reports came after that surprise resignation of Germany’s Juergen Stark, the ECB’s chief economist and a member of the executive board, on Friday and his subsequent criticism of the central bank’s buying of sovereign debt (especially Spain and Italy, it seems).
It seems German leaders and others can’t keep quiet at the moment, so confused is the country about its role in Europe that it is now undermining attempts to stabilise the situation.
Australian shares were down 2% in the opening minutes and the Australian dollar fell under $US1.04 to around $1.0350, but rose to 76.94 euro cents, putting it within striking distance of its all-time high of 77.08 euro cents reached at the end of December 2010. It later eased to trade around 76.30 eurocents.
Among the top four banks, losses ran between 4.1% and 4.6%, despite little direct exposure to Europe’s debt problems.
The Commonwealth Bank was down 4.1% to $45.45 at the close.
BHP Billiton dropped nearly 4% to $36.45.
