Euro slumps broadly on Spain bailout fears
The euro fell to a two-year low against the U.S. dollar and a nearly
12-year trough against the yen on Monday on fears Spain is edging closer
to needing a full-scale bailout that the euro zone cannot afford. Ten-year Spanish bond yields jumped as high as 7.596 percent, the
highest since the euro was created in 1999. That saw the euro drop for a
fourth straight day against the dollar to hit a low of $1.2067, the
weakest since June 2010.
Traders and analysts say the euro looks
poised to take out the key $1.20 threshold. A break beneath that could
see the currency head towards its June 2010 low of $1.1875, which marked
the weakest since March 2006.
"With the 10-year yield above 7
percent and quickly approaching 8 percent, we're at that moment where it
starts to look a lot more real than it was even just a few weeks ago,"
said John Doyle, foreign-exchange strategist at Tempus Consulting in
Washington, referring to a full-scale sovereign bailout for Spain.
Adding to pressure on the euro was a weekend report that the
International Monetary Fund may refuse to contribute further funding for
Greece. The IMF dismissed the report, saying it was "supporting Greece
in overcoming its economic difficulties."
Pain in Spain hits Wall St
U.S. stocks fell for a second straight session on Monday, as Spain
appeared closer to needing a national bailout and poor corporate results
weighed on the market.Weak results from McDonald's Corp added
to the cautious tone on Wall Street. Materials stocks were among the
day's weakest, hurt by across-the-board declines in commodity prices.
Still, stocks ended well off the day's lows, rebounding from their
initial plunge. Stocks appeared to stabilize as the S&P 500
approached its 50-day moving average of 1,332.98, a technical support
level that could trigger more losses if convincingly broken.
Overall, three stocks fell for every one that rose on the New York Stock
Exchange on Monday, a signal that the afternoon rebound was
concentrated among larger-cap shares. On the Nasdaq, about four stocks
fell for every one that rose.
"The sell-off this morning was
overdone, and obviously, the market felt that way, too," said Eric
Green, senior portfolio manager and director of research at Penn Capital
Management in Philadelphia, which oversees $6.5 billion.
"Nothing incrementally negative came out, but obviously, we're still worried about the situation there.The Dow Jones industrial average <.DJI> fell 101.11 points, or
0.79 percent, to close at 12,721.46. The Standard & Poor's 500 Index
<.SPX> declined 12.14 points, or 0.89 percent, to 1,350.52. The
Nasdaq Composite Index <.IXIC> shed 35.15 points, or 1.20 percent,
to close at 2,890.15.
Gold off lows on safety bids, outperforms equities
Gold
slipped on Monday as Spain's economic troubles fueled euro zone debt
fears, but safe-haven bids pulled bullion off session lows, as it
outperformed equities and other commodities. Gold came under
early pressure from tumbling U.S. equities and crude oil after Spain
said it sank deeper into recession in the second quarter. Many investors
worried the euro zone's No. 4 economy was closer to seeking a full
bailout.
Gold pared losses as the euro rebounded after the
International Monetary Fund said it would start discussions with the
Greek authorities on July 24 on how to bring Greece's economic program
back on track.
Last week, worries about a global economic
slowdown and deflation sent bullion slumping toward $1,560 an ounce
several times, but gold held above that level. The metal has been moving
in a range between $1,527 and $1,655 in the past three months.U.S. COMEX August gold futures <GCQ2> settle down $5.40 at
$1,577.40 an ounce, with trading volume in line with its 30-day average,
preliminary Reuters data showed.
Oil Tumbles Most This Year on European Debt Crisis
Oil
plunged the most this year on concern that Europe’s sovereign-debt
crisis is deepening and as a Chinese central-bank adviser said the
country’s economic expansion may slow further. Futures fell 4
percent as the cost of insuring Spanish debt surged to a record.
Greece’s creditors will gather this week amid doubts that the nation
will meet bailout targets. Growth in China, the second-biggest crude
consuming country, may cool for a seventh straight quarter, said Song
Guoqing, a member of the People’s Bank of China monetary policy
committee.
“Worries about the European debt crisis are
overshadowing everything else,†said Phil Flynn, senior market analyst
at the Price Futures Group in Chicago. “The prospect of a
deflationary spiral is back haunting us, especially given the signs of a
Chinese slowdown. This is bad for the outlook for commodity demand,
especially oil.â€
Crude oil for September delivery fell $3.69 to
settle at $88.14 a barrel on the New York Mercantile Exchange. It was
the biggest decrease for a front-month contract since Dec. 14. Prices
are down 11 percent this year.
Nikkei seen falling as Spain worries grow
Japan's Nikkei share average is likely to fall on Tuesday after worries that Spain may not be able to avoid a bailout pummelled risk assets on global markets. Investors
are also concerned that Japan's earning season, which starts in earnest
later this week, is unlikely to give the market a fillip as companies
brace for a slowdown in the global economy.
On Monday the Nikkei
shed 1.9 percent to 8,508.32 <.N225>, its lowest close sine June
8. The broader Topix index <.TOPX> slipped 1.8 percent to 720.62,
having fallen in 11 of the past 12 sessions. World equity markets
sold off and the euro set new two-year lows against the U.S. dollar on
Monday after reports that more indebted regions in Spain need financial
aid fueled fears that the country may need a bailout.
As losses
mount, retail Japanese investors with long positions in margin trading
may also be forced to liquidate positions to access collateral, adding
to the downward pressure, an analyst at a Japanese brokerage warned.
Seoul shares seen extending falls on Spain bailout fears
Seoul shares are expected on Tuesday to extend their decline from the previous session, as fears that Spain could be pushed into seeking a bailout continue to sap investor appetite for risk. U.S.
stocks fell for a second straight session on Monday but ended well off
the day's low, rebounding from an initial plunge and stabilizing near
the S&P 500's 50-day moving average.
Still, investors will be
taking aggressive bets off the table after Spanish media reported up to
half-a-dozen more regions may follow Valencia in requesting central
government aid, pushing Spanish bond yields to a euro-era high of 7.5
percent, well above the 7 percent danger threshold. The Korea
Composite Stock Price Index (KOSPI) <.KS11> dropped 1.84 percent
to a one-and-a-half week closing low of 1,789.45 points on Monday.
Hong Kong stock market to delay opening due to typhoon
Hong Kong's stock market will delay its opening on Tuesday morning due to Typhoon Vicente. Should
the typhoon signal of 8 and higher remain in force after 9 a.m. (0100
GMT), the Hong Kong stock exchange will remain closed in the morning. If
the signal of 8 or higher is still in place by noon, the stock markets
will be closed for the whole day.
Source : Reuters
Harga Emas dunia kembali bergerak melemah
diperdagangan hari Selasa (24/07) setelah kemarin merosot tajam akibat
investor khawatir dengan masalah keuangan di Spanyol dan Yunani.
