Market Update & Important Indicators
The Dow Jones tumbled 392 points as investors worried whether political turmoil in Italy could unravel a fragile European economy and cause global growth to sputter. The blue-chip index fell 424 points, or 1.7%, to 24329, as 29 out of 30 components traded lower. The S&P 500 declined 1.2% and the Nasdaq Composite slipped 0.9%. The indexes were trading at their lowest levels in about three weeks as investors sought the safety of the U.S. dollar and Treasuries, both of which rallied sharply. The US Gold price gained only 0.1% to record 1298.40 US$/oz.
European stocks finished sharply lower, led by a selloff in Italian equities. Investors were assessing the prospect of new elections in Italy, which could effectively serve as a referendum on the euro. Meanwhile, political uncertainty in Spain hit Madrid-traded stocks, as Prime Minister Mariano Rajoy's struggle to stay in power raised fears of new elections. Italy's FTSE MIB index tumbled 2.7% to end at 21,350.88. Investors also fled Italian debt, with the 2-year bond yield recently surging to 2.42%, as prices sank. Bond prices move in the opposite direction of yields. In Spain, the IBEX-35 index gave up 2.5% to close at 9,521.30, as traders fretted about the future of Rajoy's government. France's CAC 40 fell 1.3% to end at 5,438.06, and Germany's DAX 30 index sank 1.5% to 12,666.51. In London, the FTSE 100 moved down 1.3% to finish at 7,633.
After a pretty wide swath of gains to start the week in Asia, stock indexes were almost universally lower as a risk-off move in the morning in bonds and currencies helped sour sentiment for equities. Selling continues to build into the close in Hong Kong after Chinese small caps finished at session lows. The same occurred in South Korea. But indexes in Japan and Taiwan ticked up into the finish in those markets, reducing earlier declines. Most Southeast Asian countries had a holiday. But Vietnam's benchmark rebounded 1.8% ahead of the close after entering bear-market territory Monday. Japan's Nikkei 225 was down 0.5% as the yen strengthened against the dollar. Hong Kong's Hang Seng fell 1% amid declines in shares of financials while South Korea's Kospi fell 0.9%. Indian shares snapped three-sessions gains as weakness in other global markets amid fresh geopolitical tension weighed on the sentiment. The S&P BSE Sensex fell 0.6% to 34949.24. Investors will likely bide their time until the domestic GDP data is released later this week before taking fresh positions.
As stock markets across Asia Pacific saw some pressure, the past week-plus of underperformance of Australia helped equities there trade slightly higher. With Brent oil futures rebounding some to limit further declines in energy stocks, the S&P/ASX 200 rose 0.2% to 6013.6 after having dropped seven of the past eight days. Energy eased 0.02% while materials ticked up 0.2%. Banks rose 0.5% and health care 0.8%. But Monday's standout, IT, skidded 1.7% to more than reverse that space's start-of-week gain. Software firm Altium shed 4.9%, erasing the rest of May's gain to put the year's pop back at 53%.
Base metal prices were mostly up on the London Metal Exchange. The aluminium price increased 0.6% to 2,266/t, while the lead price gained 0.3% to 2,435/t. A small decrease of 0.3% was recorded in the 3-month copper contract, which closed at 6,846/t. The nickel price gained only slightly by 0.8% to 14,844/t. Tin gained 1.5% to close at 20,490/t.
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