By Greg Peel

The Dow fell 139 points or 1.1% while the S&P lost 0.9% to 1335 and the Nasdaq dropped 0.5%.

It was mid afternoon in Europe when a dour old Frenchman sat down to a press conference in Helsinki and said, “We are never precommitted and we can increase rates whenever we judge it appropriate to do that”.

It was a double whammy. Not only had the European Central Bank voted unanimously to leave the eurozone cash rate at 1.25% but Jean-Claude Trichet's comments suggested the expected rate rise may not even be coming in June. The world has been long the euro in anticipation of inflation-led ECB monetary policy tightening. Very quickly last night, it wasn't anymore.

Very quickly, the euro plunged 2% toward US$1.45. It was only a couple of sessions ago that US$1.50 looked liked being conquered. And while there might have been a lot of euro longs in the market, it's nothing compared to the number of US dollar shorts. The US dollar index leapt 1.3% to 74.08.

Precious metals were the first to break. Silver has already dropped over 20% from its peak, stirring up some fear in commodity markets. But that didn't stop silver leading the charge once again last night. It fell 11.5% or US$4.52 to US$34.80/oz. Gold chimed in with a 2.8% fall of US$41.80 to US$1474.50/oz.

Over in the Nymex oil pit, traders have been nervous about a possible margin increase. It didn't really matter last night when one look at the precious metal markets was enough to snap resolve. West Texas crude fell 9% or US$9.57 to US$99.67/bbl. Over at the ICE, Brent crude fell 9% or US$10.49 to US$110.34/bbl.

The LME didn't need any further encouragement. Copper fell 3%, aluminium and zinc 4%, nickel 5%, lead 6% and tin 7%.

Was there any good news? Oh yes: the Aussie fell 1.6% to US$1.0579.

The speculators have left the building. Now we can all get some sleep. Or at least, the fast-moving risk players are out. The problem is there will still be plenty of less reactive holders of commodities who would have been standing there last night stunned, like rabbits in the headlights. They may yet have to make the uneasy, belated decision to get out too. So this may not be over yet. However, while last night's moves in commodity prices were the biggest seen since the 2008 rout, there has been no particular trigger, such as a GFC. One can argue that the trigger to all of this has simply been the otherwise largely unimportant death of one Osama Bin Laden. It was on that announcement that silver profit-taking first ramped up, and suddenly here we are. Nothing else changed last night.

The other important point is that while energy, gold and material names together form a large part of the S&P 500 (and a much higher proportion of the ASX 200), there are still plenty of companies which win from lower commodity prices. Oil, in particular, is the lifeblood of all industry. It's recent run up has sent input costs soaring. Even commodity producers will feel the cost-side benefit of lower oil prices.

It was thus quite a rock'n'roll ride on Wall Street last night. The Dow dropped early and by 11am was down around 120 points, but by 12pm it had pulled 100 points of that back. The slippery slope of commodity prices nevertheless became too much, and the Dow hit almost 200 points down. Some late buying saved the day.

Commodity calamity aside, Wall Street was also spooked last night by the release of the weekly new jobless claims numbers. New claims spiked 43,000 to 479,000 last week when economists had expected a 24,000 drop to 412,000. These numbers are very volatile, and economists rarely get them right, but with a weaker than expected ADP report out on Wednesday and non-farm payrolls due tonight, the US economic recovery is in the spotlight.

But then at what point do we determine the global economy to be much better off with much lower commodity prices? There hasn't been much change in real demand expectations, especially out of Asia.

It was economic concerns that had investors piling into US bonds again last night, despite their recent run up. The ten-year yield fell 7 basis points to 3.16%.

The SPI Overnight lost 34 points or 0.7%.

Bring on US jobs.

I'll be on deck for Business View on Sky Business at 2pm today before Rudi joins the Round Table on BoardroomRadio at 3pm.

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