Global Markets Overview - 11/24/2011

From Stan Shamu, Markets Strategist, IG Markets

Global markets extended their losses overnight on deepening concerns about the European debt crisis, after a poorly-received German debt sale. Germany failed to find buyers for 35% of the bonds it offered at an auction. There was also a swathe of disappointing economic data, with European services and manufacturing output shrinking for a third month, US durable goods orders falling and unemployment claims topping forecasts.

Among the major averages the Dow Jones Industrial Average lost 2.1% to end at 11258. The S&P dropped 2.2% to 1162 and the NASDAQ was down 2.4% to close at 2460. US markets are closed tomorrow for the Thanksgiving holiday.

The bad news just seems to be mounting for global markets, with economic data now starting to expose the cracks. After the weak preliminary PMI numbers from China yesterday, investors are starting to realise just how devastating the European crisis is. The global economic recovery seems to have stalled and should the European debt crisis persist, it will only get worse. Fears of contagion are also rising following the poor bond auction for Germany. There is a lot for investors to digest at the moment, with one of the main concerns being rigorous stress tests for the US banks.

Risk assets were sold off across the board, with commodities and currencies heading lower. Oil dropped 1.5%, gold fell 1.3% and copper retreated 2.3%. This will weigh on our resource names. The Aussie dollar slipped below 97 against the greenback overnight.

Following the bearish leads, we are calling the Aussie market down 0.5% at 4032. This is a much smaller drop compared to what we saw in US and European markets, as we had already lost significant ground in yesterday's afternoon session. Locally, investors will be looking out for David Jones' quarterly sales figures and AGMs for Paladin Energy and Woolworths. Apart from RBA Governor Glen Stevens' speech, there is no major economic data locally today.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

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