It was a disastrous night for international markets last evening.
The carnage started in Europe, where German two-year notes surged after ECB President Trichet said the central bank will offer banks more cash amid a spreading debt crisis.
The FTSE shed 3.4%, whilst the CAC (-3.9%) and DAX (-3.4%) also suffered heavy falls.
Stateside, the losses were even more pronounced amid growing concerns that the economy will relapse into recession.
Investors are pinning their hopes to data releases to show that the economy is not deteriorating, and to this point those data releases have disappointed.
Tonight’s non-farm payroll jobs numbers are extremely important; another disappointing number could see a repeat of last night’s action.
The Dow Jones shed 512 points (-4.3%), whilst the broader S&P gave up 4.8% and the tech-heavy Nasdaq slumped 5.1%.
The rout last night sent the S&P to its worst slump since February 2009. The index has given up more than 11% since 22 July, dragging the index’s valuation to 13.2 times reported earnings – the cheapest level since the month the bull market began in 2009.
The yen fell against all 16 of its most-traded counterparts after Japan sold its currency to stem gains that are threatening the nation’s economy.
Yesterday marked the third time Japan has sold its currency after six years of a hands-off approach that ended in September 2010.
This morning the Kiwi dollar has dropped to a three-week low against the US dollar amid crumbling risk appetites.
Crude oil fell to its lowest level in five month, erasing 2011 gains amid growing evidence that the US economy is stalling.
The black gold declined US$5.30 to US$86.63 a barrel, its lowest settlement since February 18 and the biggest single-day drop since 5 May.
Elsewhere, gold pulled back a touch overnight but not before setting yet another record high of US$1684.90.
Today’s session will bring us data in the form of the RBA monetary policy statement.