Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

GLOBAL MARKETS-Stocks, commodities slide ahead of German vote

Published 09/28/2011, 04:53 PM
Updated 09/28/2011, 04:56 PM

* Copper prices slump almost 7 percent

* Benchmark Treasury yield back below 2 pct

* U.S. stock market sells off late in session (Updates prices, adds U.S. market close, Nikkei futures)

By Rodrigo Campos

NEW YORK, Sept 28 (Reuters) - Commodity prices fell and stocks ended a three-day rally on Wednesday on anxiety over a looming German vote to strengthen the fund set up to help the euro zone combat its debt crisis.

Infighting in the German ruling coalition turned investors skittish, as a failed vote would hamper the bloc's ability to prevent a Greek default that could send the global financial system into turmoil.

Market perception that a sovereign default in Europe could harm the global economy was underscored by a sharp decline in copper prices, a proxy for growth expectations.

Global stocks had rallied in the past three days on optimism Europe was getting a handle on the crisis. But the drop in stocks and the euro showed markets remain very sensitive to any signs of a setback.

An index of world stocks <.MIWD00000PUS> dropped 1.4 percent following its best day in a year and a half. Copper fell nearly 7 percent and U.S. crude oil futures dropped 4.3 percent. Nikkei futures fell 0.7 percent.

"There has been widespread liquidation across (commodities) ahead of the German Bundestag lower house vote on Thursday on whether to back new powers for the euro zone's rescue fund," said Phillip Streible, analyst at MF Global in Chicago.

For the day, the Dow Jones industrial average <.DJI> dropped 179.79 points, or 1.61 percent, to 11,010.90. The S&P 500 <.INX> slid 24.32 points, or 2.07 percent, to 1,151.06. The Nasdaq Composite Index <.IXIC> lost 55.25 points, or 2.17 percent, to 2,491.58.

Traders also cited the month-end and quarter-end as a reason for wild moves in various markets.

Global stocks were on track to post their worst month in 16 and their worst quarter since the end of 2008.

The euro zone's sovereign debt issues have dragged on regional economies and threatened banks across the continent and beyond.

European Union and International Monetary Fund inspectors will return to Athens on Thursday to decide whether the Greek government has done enough to secure help from its neighbors and avoid a default. For details see [ID:nL5E7KS0AC].

"We are trying to avoid a Greek insolvency. But I cannot rule it out," German Chancellor Angela Merkel was quoted by Bild newspaper as telling her coalition ahead of an increasingly complex vote amid concerns that German taxpayers' investments might have to be written off. [ID:nL5E7KS3XA].

Benchmark U.S. Treasury yields dipped back below 2 percent as demand for government bonds picked up in late trading. U.S. 10-year Treasury prices fell 4/32 of a point to yield 1.994 percent.

The euro was down 0.2 percent at $1.3557 after having earlier hit a one-week high of $1.3690. (Reporting by Rodrigo Campos; Additional reporting by Gene Ramos; Editing by Dan Grebler)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.