It’s shaping up as a rough day on the ASX, as unease surrounding political turmoil in Italy spread across global markets overnight. The Dow Jones industrial average shed about 500 points at session lows, while stocks in Milan fell by almost 3%.
To the scoreboard:
- Dow: 24,361.45 -391.64 (-1.58%)
- S&P 500: 2,689.86 -31.47 (-1.16%)
- AUD/USD: 0.7506 -0.0041 (-0.54%)
- ASX200 SPI futures (June contracts): 5,968 (-45)
1. Italy is in political deadlock, with another round of elections likely in the coming months which could see anti-Europe populist parties gain even more support. Billionaire George Soros said overnight that the European Union is in the midst of an “existential crisis“.
2. Italian bonds had their biggest fall in 25 years, as yields on 10-year BTPs soared more than 50 basis points while shorter-term 2-year debt rose above 2% for the first time since 2013.
3. And US bond yields saw the biggest daily drop in nearly two years, as market re-priced the outlook for 2018 rate hikes. The benchmark 10-year Treasury yield fell more than 10 basis points and is now back below 2.80%.
4. The euro tumbled to a six-month low against the USD. Safe-haven currencies soared, with the US dollar index up 0.75% while the Japanese yen gained more than 1.5% against major peers.
5. Oil was sold in the US as prices for West Texas Intermediate dropped 1.5% to $US66.82 a barrel. But benchmark crude prices were little-changed above $US75. Elsewhere in commodities, iron ore caught a bid.
6. And amid the chaos on global markets, prices for gold — usually a safe-haven asset — hardly moved. But crypto made a comeback, as bitcoin bounced off its recent lows and a short time ago was up 5% at around $US7,500.
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