European markets were battered by several factors such as Greece’s bailout, Spain on the verge of asking for financial aid, and a 2.5% decline in industrial production in the month of September.
The UK’s FTSE fell 64 points (-1.1%) to settle at 5722 whilst Germany’s DAX lost 67 points (-1%) to settle at 7102. France’s CAC declined 31 points (-1%) to settle at 3400.
In the US, markets were largely affected by worries over the eurozone, the fiscal cliff discussions, and lower retail sales for the month of October. President Obama laid out his opening gambit in the budget negotiations with the Republican Party.
His offer of $1.6 trillion in tax hikes appears far outside what the Republicans are willing to accept, lowering the odds of a deficit reduction deal being reached before year end.
That uncertainty saw the major US indices slide at least one percent each, with the S&P500 now down more than 10% from its September high, putting it in correction territory.
The Dow Jones lost 185 points (-1.5%) to settle at 12571 whilst the S&P decreased 19 points (-1.4%) to settle at 1355 and the Nasdaq fell 37 points (-1.3%) to settle at 2847.
In the commodity space, oil advanced due to tensions in the Middle East that may ultimately affect supply levels. Crude oil for December added 94 cents to settle at $86.32 a barrel.
Meanwhile, gold climbed 0.3% to settle at $1730.10/oz as investors sought a safety net against global uncertainties. In the currency space, the yen fell against its peers due to Japan’s upcoming elections.
The US dollar fell against the yen and the euro after reports showed that several of the Fed’s officials were in favour of additional monetary stimulus.
Today will see the receipt of MI inflation expectations (11:00am, AEDT) and new motor vehicle sales data (11:30am, AEDT).