It was a tale of two halves overnight, with successful French and Spanish bond auctions sending European markets sharply higher, only to be scuttled later by soft US service sector data.
The British and German markets had been up circa 1% after the Spanish bond auction reached its upper limit and borrowing costs in France fell, but they both ultimately finished well off their highs.
The FTSE managed to cling onto an eight point (+0.2%) gain, settling at 5767, whilst the DAX (-0.2%) and CAC (-0.1%) didn’t
fare so well.
The economic outlook in the euro area is subject to downside risks as the sovereign-debt crisis damps momentum, Draghi said at a press conference, adding that policy makers didn’t discuss cutting the ECB’s benchmark interest rate below its current record low of 1%.
Stateside, the Dow shed 62 points (-0.5%) to settle at 13207, whilst the S&P (-0.8%) and Nasdaq (-1.2%) suffered even heavier falls.
US stocks extended losses as the Institute for Supply Management’s non-manufacturing index fell to a four-month low of 53.5,
compared with the median economist estimate of 55.3.
The Aussie dollar slipped below the 1.03 handle overnight and is currently buying US$1.026, whilst Canada’s dollar declined for a second consecutive session against the greenback as weaker-than-forecast US economic data pointed to diminished demand from the nation’s biggest export market.
Oil tumbled the most this year as European Central Bank President Mario Draghi said the euro area’s economic outlook has become “more uncertain”, whilst gold and copper also lost ground.
Crude shed 2.5%, to settle at US$102.58 a barrel, whilst gold shed 1% to US$1640 an ounce.
In company news, Qantas has released a strategy update in which it said that it will reduce capital expenditure in 2012/13 by a further $400 million.
Today’s session will being us the RBA monetary policy statement, at 11:30am, AEST.