A roundup of trading on major world markets:
NEW YORK – US stock markets tanked Monday on news that Congress probably has failed to reach a deal to cut the country’s massive budget deficit and to extend stimulus measures into next year.
“US lawmakers are expected to announce Monday that they have failed to reach an agreement on budget cuts,” said Ryan Sweet of Moody’s Analytics.
The Dow Jones Industrial Average plummeted 248.02 points (2.10 per cent) to 11,548.14 in closing trade.
The broad-based S&P 500 index was down 22.54 points (1.85 per cent) to 1,193.11, and the tech-heavy Nasdaq Composite fell 49.25 (1.91 per cent) to 2,523.25.
LONDON – European stocks have closed down sharply and the euro has slumped amid a warning on France’s top credit rating and an apparent failure to reach a deal on cutting the US budget deficit.
Markets shrugged off an election victory for Spain’s centre-right, with the euro sliding below $US1.35 for most of Monday, but later recovered on US concerns.
London’s FTSE-100 gave up 2.62 per cent to 5,222.60 points, Frankfurt’s DAX lost 3.35 per cent to 5,606.00 points and France’s CAC-40 dropped 3.41 per cent to 2,894.94 points.
Madrid slumped 3.48 per cent and Milan plunged 4.74 per cent.
The euro was trading at $US1.3520 at 1700 GMT (0400 AEDT Tuesday), compared to $US1.3519 on Friday in New York.
Spanish government borrowing costs rose as the financial markets found no reason for confidence from a sweeping election win for a right-wing government committed to radical budget cuts so as to balance the public finances.
The yield or rate of return earned by holders of benchmark Spanish 10-year government bonds rose to 6.514 per cent in evening trading from 6.345 per cent at the close on Friday.
Spain’s right stormed to its biggest election victory ever on Sunday, winning over voters desperate for an end to soaring unemployment and the eurozone debt storm.
A rise in the borrowing rate on French debt bonds and possibly slowing growth could meanwhile have a negative effect on France’s top AAA credit rating but not immediately, Moody’s warned on Monday.
Nevertheless France successfully placed seven billion euros ($A9.5 billion) in short-term debt on Monday, with yields mixed amid strong demand by investors.
Benchmark 10-year French bonds were yielding 3.461 per cent at 1700 GMT, from 3.457 per cent on Friday, after having risen to 3.591 per cent in the morning.
The rate of return on 10-year Italian bonds rose to 6.647 per cent from 6.631 per cent on Friday, while Germany’s 10-year bonds benefited from safe-haven buying that pushed the yield down to 1.897 per cent from 1.964 per cent.
HONG KONG – Asian shares fell as markets awaited details of plans to fix Europe’s debt crisis and the outcome of key Sino-US trade talks, with simmering tensions between the economic superpowers.
Tokyo gave up 0.32 per cent, or 26.64 points, to close at 8,348.27 while Sydney ended 0.34 per cent, or 14 points, lower at 4,163.0 and Seoul was down 1.04 per cent, or 19.14 points, at 1,820.03.
Hong Kong was off 1.44 per cent, or 265.38 points, to end at 18,225.85 and Shanghai closed flat, edging 1.43 points lower to 2,415.13.
Markets also reacted to news that Japan logged an unexpected trade deficit in October, while business hub Singapore predicted sharply lower economic growth next year and warned a weaker global economy could worsen the situation.
Investors also awaited details of China-US trade talks which started on Sunday, with Beijing’s currency policy — and claims it undervalues the yuan — and market access restrictions expected to top the agenda.
The two countries signed agreements covering areas that include energy cooperation and the trade of high-technology products, but offered no details, Dow Jones Newswires reported.
WELLINGTON – Wellington closed 0.17 per cent, or 5.67 points, higher at 3,256.56.
