Morning Market Analysis: Wind Out Of The Sails

19th Jun 2012

After strong gain in the previous session, international markets were far more subdued last night.

A weekend election victory by pro-bailout parties in Greece removed one headwind facing the euro zone. But rising bond yields in Spain and Italy reinforced views that Europe has yet to control its debt crisis.

The election results also offered little reprieve from contagion concerns as yields on both Italian and Spanish bonds rose, with Spain’s 10-year yield climbing above the 7% mark at which other highly indebted eurozone nations were forced to seek bailouts.

In London the UK’s FTSE 100 put on 12 points (+0.2%) to settle at 5491, whilst the CAC (-0.7%) and DAX (+0.3%) were mixed.

Stateside, the Dow Jones shed 25 points (-0.2%) whilst the S&P 500 (+0.1%) and NASDAQ (+0.8%) advanced.

The Aussie dollar was little changed overnight and is presently buying US$1.012, whilst the euro fell from the strongest in almost a month versus the US dollar as German Chancellor Angela Merkel faces rising pressure from Group of 20 leaders to contain the region’s crisis, which threatens global economic growth.

Oil dropped for the first time in three sessions as the worsening European debt crisis threatened to slow global economic growth and reduce demand for crude.

Oil for July delivery fell 76 cents to settle at $83.27 a barrel on the New York Mercantile Exchange. Prices are down 19% in the second quarter and 16% this year.

Elsewhere, copper was flat whilst gold put on 0.1% to settle at US$1629 an ounce.

Today’s session will bring us the latest RBA monetary policy meeting minutes, at 11:30am, AEST.

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