Morning traders.Market wrap: Solid falls in Europe and the US...

Morning traders.

Market wrap:

Solid falls in Europe and the US have Australian shares pointed lower for a second day following disappointing US housing data and another night of grim headlines from the euro-zone.

The June SPI 200 futures contract ended the night session 43 points or 1% weaker at 4043 as oil slumped to a seven-month low, copper gave up the last of its gains for the year and the big Australian miners all fell at least 3% in overseas trade.

US stocks plunged from the opening bell and closed near their lows as Spanish and Italian borrowing costs climbed towards critical levels and fresh polling showed Greeks want to scrap the latest bailout plan. The S&P 500 is on track for its worst monthly performance since September after falling 1.43% last night. The Dow dropped 161 points or 1.28% and the Nasdaq gave up 1.17%.

Hopes that the US housing market was stabilising were dented by a 5.5% slump in pending home sales last month. The report came as a grave disappointment after data earlier this week suggested sales of new homes were stablising.

"It's a high-anxiety market," the head of asset allocation in North America at Baring Asset Management told Bloomberg. "We're not anywhere near the end of Europe's debt crisis. In the US, economists are making the point that if housing were to stabilise, consumption could grow. The question is: what's going to allow the housing market to stabilise?"

Falls in Europe were even heavier as business confidence sagged to its lowest level in 31 months, Spanish bond yields pushed above 6.6% and Italy's borrowing costs increased at an auction last night. Indexes pared losses mid-session after the European Commission suggested the euro-zone bailout fund could be used to help troubled banks, but the bounce quickly faded. Germany's DAX lost 1.81%, France's CAC 2.24%, Spain's IBEX 35 2.58%, Greece's Athens General Index 3.19% and Britain's FTSE 1.74%.

New polling appeared to dash hopes that Greeks will return a pro-austerity, pro-bailout government on June 17. A magazine poll had the leftist Syriza party 3.5% ahead of its nearest rival. A separate poll conducted by Bloomberg showed a majority of Greeks want to renegotiate a bailout packaged agreed by the last government.

Most dollar-denominated commodities came under the pump as the euro dropped below US$1.24 for the first time since mid-2010. Oil settled at its lowest level since September as China's dousing of stimulus expectations earlier in the week continued to depress demand. West Texas crude for July delivery was recently down $3.29 or 3.6% at US$87.47 a barrel.

Resource stocks copped a drubbing in overseas trade as traders once again rotated into safer havens. In the US, BHP lost 3.84%, Rio Tinto 4.86% and Alumina 5.12%.

Copper fell into the red for the year amid soft demand from China as macro-economic concerns continued to overshadow trade. In London, copper gave up 2.1%, aluminium 0.3%, lead 1.05%, nickel 1.3%, tin 2.1% and zinc 1.2%. US copper for July delivery was recently off nine cents or 2.5% at US$3.38 a pound.

"I think what the [copper] market is beginning to price in and what we are going to see priced in over the next few weeks is the eventuality of that June 18 deadline, where Greece may very well exit the euro," the managing director of TrendMax in the US told Reuters. "Greece is really the lynchpin. If Greece goes, then comes Spain. We're climbing the wall of worry again."

Gold provided one of the few bright spots, bouncing off technical support around US$1,530 an ounce. Gold for August delivery was lately up $12.50 or 0.8% at US$1,563.50 an ounce.

TRADING THEMES TODAY

BACK ON DEFENCE: This week is playing out ominously like the last, with early optimism slowly caving under a welter of ugly headlines. No surprise to see the scale of overnight falls on Wall Street and commodity markets after yesterday's dampening of stimulus expectations by China. Opinion polling in Greece is notoriously volatile and it remains possible that the nation will effectively vote for a messy default and exit from the euro on June 17. Borrowing costs in Spain and Italy continued to deteriorate overnight, although it's worth noting that 10-year bond yields are still not as high as they were in November. The Russell 2000 index of small caps fell 1.95% in the US overnight, confirming that risk assets were on the nose. Precious metals miners fared better than most and may offer a happy hunting ground for local traders this morning.

ECONOMIC NEWS: There's a slew of domestic data due at 11.30am EST: building approvals, private capital expenditure and private sector credit. Europe has another busy night but if we're lucky a heavy schedule in the US will take centre stage. US highlights include: non-farm employment change, GDP, weekly jobless claims, Chicago PMI, GDP price index, crude oil inventories and natural gas storage.

Good luck to all.