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E.L. & C. Baillieu Stockbroking Ltd is a Participating Organisation of the Australian Stock Exchange Limited. The firm commenced business in 1889.  Since its inception, E.L. & C. Baillieu Stockbroking Ltd has encouraged and assisted private investors.

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E.L. & C. Baillieu Morning Wrap; U.S. crude futures slump on European political uncertainty

European stock markets and the euro tumbled overnight, as political uncertainty in two key euro-zone countries, France and the Netherlands, pushed investors into the traditional haven of German government bonds.

Author: E.L. & C. Baillieu Stockbroking - by Andrew Thain

HEADLINES

- U.S. stocks joined a global selloff as weak euro-zone economic data and French and Dutch political uncertainty underscored worries about the region's debts.

- European stock markets and the euro tumbled overnight, as political uncertainty in two key euro-zone countries, France and the Netherlands, pushed investors into the traditional haven of German government bonds.

- U.S. crude futures slumped as political uncertainty in Europe coupled with disappointing data stung equities markets and signaled that falling oil demand is likely to continue.

- Disappointing global economic data and anxiety about Europe's debt crisis drew investors to the safety of the U.S. dollar Monday, denting demand for gold and pushing the precious metal to its lowest price in more than two weeks.


US MARKETS

U.S. stocks joined a global selloff as weak euro-zone economic data and French and Dutch political uncertainty underscored worries about the region's debts.

The Dow Jones Industrial Average slid 102 points, or 0.8%, to 12927. The Standard Poor's 500-stock index shed 12 points, or 0.8%, to 1367, as all 10 of its sectors fell. The Nasdaq Composite dropped 30 points, or 1%, to 2970.

Wal-Mart fell 4.7%, its biggest drop since January 2009 and accounting for more than a fifth of the Dow's decline, after bribery allegations in Mexico prompted fears of legal risks ahead.

Kellogg tumbled 6.1% after the cereal and snacks maker lowered its full-year profit and sales outlook, saying its first-quarter results were weaker than expected.

In corporate news, Facebook agreed to pay Microsoft $550 million for 650 patents and patent applications, as well as licenses to additional intellectual property. The assets are part of a patent trove that AOL agreed to sell to Microsoft for $1.06 billion earlier this month. Microsoft dropped.


EUROPEAN MARKETS

European stock markets and the euro tumbled Monday, as political uncertainty in two key euro-zone countries, France and the Netherlands, pushed investors into the traditional haven of German government bonds.

The Stoxx Europe 600 index sank 2.3% to 251.75, its lowest close since mid-January. By contrast, the yield on 10-year German Bunds, fell to a record low of 1.55% as investors flocked to safety.

French stocks slid into the red for the year as the CAC 40 index dropped 2.8% to 3098.37. Investors sold following Sunday's first-round presidential election.

Socialist candidate François Hollande, who is seen as less committed to fiscal austerity than President Nicolas Sarkozy, took first place in the contest. The two candidates will face each other in a runoff election on May 6.


ASIAN MARKETS

Data showing that Chinese manufacturing activity continued to contract in April, albeit at a smaller pace, pushed down Asian stocks, with investors also wary ahead of key central bank meetings.

Hong Kong's Hang Seng Index dropped 1.8% to 20624.39, China's Shanghai Composite fell 0.8% to 2388.59 and Australia's S&P/ASX 200 index fell 0.3% to 4352.40. Japan's Nikkei Stock Average lost 0.2% to 9542.17, South Korea's Kospi slipped 0.1% to 1972.63 and Taiwan's Taiex shed 0.3% to 7481.09.

Elsewhere, Inpex slipped 0.2% in Tokyo and Korea Zinc gave up 1.1% in Seoul. Aluminum Corp. of China Ltdfell 3.9% and Jiangxi Copper lost 1.5% in Hong Kong; in Shanghai, they shed 1% and 1.3%, respectively.


AUSTRALIAN MARKETS

Australian shares slipped in quiet trade, retreating from eight-month highs hit last week as investors prepared for crucial inflation data that could pave the way for another interest rate cut.

The benchmark s&P/ASX200 index fell 14.1 points, or 0.3 per cent, to 4352.4, while the broader All Ords also dropped 14.1 points, or 0.3 per cent, to 4430.3. The market's falls were led by the materials sector, which ended 0.7 per cent lower. Industrials dropped 0.6 per cent, financials ended flat, while telcos rose 0.6 per cent.

BHP Billiton was down 18 cents, or 0.5 per cent, at $35.32, while Rio Tinto gained 2 cents to $66.65 and fellow miner Fortescue Metals fell 6 cents, or 1 per cent, to $5.92.


OIL

U.S. crude futures slumped as political uncertainty in Europe coupled with disappointing data stung equities markets and signaled that falling oil demand is likely to continue.

Light, sweet crude for June delivery settled 77 cents, or 0.7%, lower at $103.11 a barrel on the New York Mercantile Exchange, after falling as low as $101.82 earlier in the session.


METALS

Disappointing global economic data and anxiety about Europe's debt crisis drew investors to the safety of the U.S. dollar Monday, denting demand for gold and pushing the precious metal to its lowest price in more than two weeks.

The most actively traded contract, for June delivery, fell $10.20, or 0.6%, to settle at $1,632.60 a troy ounce on the Comex division of the New York Mercantile Exchange. That is the lowest settlement price since April 5.

Gold fell sharply early in European trading hours, as heavy selling jolted the market awake amid thin liquidity.

The collapse of austerity talks in the Netherlands, the challenger's lead in the first round of France's presidential elections, and data showing contraction in the euro zone's manufacturing and service economies all gave gold traders pause Monday.

Andrew Thain can be contacted by email; CLICK HERE.

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