Market wrap: European and US stocks wilted overnight on fears of credit rating downgrades for governments that took aggressive action to prop up their economies during the financial crisis.
A warning by Standards and Poor's that it may downgrade UK sovereign debt sparked a global sell-off on concerns that other governments face the same fate. Major European markets fell by more than 2.5% and only a late rally saved Wall St from similar losses. Key US stock indexes finished more than 1.5% weaker at their lowest closing level this week.
Oil and gas companies slid lower as crude pulled back from six-month highs, closing down 1.6% at $61.04 after briefly falling under $60. Financial stocks pared losses near the close but most finished in the red.
Gold miners provided the only real bright spot as the US dollar continued to come under pressure. The precious metal has added nearly 2% since this time yesterday to break above $950 for the first time in at least two months, recently trading at $953.60.
Base metals crumpled on concerns that supply will outweigh demand if the US Federal Reserve's gloomy outlook for the US economy outlined on Wednesday proves correct. Copper fell more than 3.5% and other base metals recorded similar falls.
Futures traders expect a messy end to the week. The SPI closed 61 points lower at 3776.
So the outlook for today is pretty glum. Gold miners should continue to benefit from the "flight to safety", but other miners are likely to flounder because the rally in base metals is again under real pressure. For me, it looks like a day for bounce-trading of oversold shares but as always, be patient, selective and willing to take a loss if a bounce doesn't eventuate.
