Market wrap: Shares and commodity prices tumbled overnight after a grim World Bank forecast for the global economy.
A World Bank report said the global economy will shrink 2.9% this year, worse than the 1.7% contraction it predicted in March. The news prompted investors to dump stocks for traditional safe-haven investments such as US Treasuries and the US dollar, placing downward pressure on commodity prices.
Stock markets in Europe fell 2.5 - 3% and US markets continued the rout. The S&P 500 lost 3% to finish below 900 for the first time in a month. The Dow slid 2.3% and the Nasdaq 3.35% as the sell-off continued to the closing bell. The mining-heavy Canadian market crunched 4.4% lower.
In the US, there were significant falls for banks (6%), REITs (5.5%), gold/silver miners (7.5%), oilers (4.5%) and airlines (5.5%).
Oil skidded 4% to a three-week low on demand concerns, recently trading at $66.93. Gold was squeezed by the rising US dollar and reduced inflation fears, hitting its lowest level in six weeks, recently down 1.5% at $921.90. Base metals were walloped. In US trade, copper lost 5.2%, aluminium 6.4%, nickel 5.2%, lead almost 6% and zinc 5.7%.
Futures traders say it's a day for tin hats. The SPI futures index finished 88 points lower at 3801.
Well, markets have been looking for an excuse to sell off and last night they got it. A healthy retrace is no bad thing but let's hope last night was just a knee-jerk reaction and not the start of something more serious. The opening here will be ugly, but once the dust settles, I'll look for oversold stocks close to support levels and showing signs of fading selling. Purely intraday trades - I don't want to hold much, if anything, overnight after last night's big move. This could be a challenging week.
