A flash crash in the UK pound unsettled global markets this morning, sending US futures sharply lower and weighing on Australian shares.
At 1pm EST the ASX 200 was 17 points or 0.3% weaker at 5466 despite a positive lead from pre-market futures following a mixed close on Wall Street overnight. US equity futures fell after the UK pound crashed 6.1% in two minutes before recouping most of its losses. Dow futures were recently off 47 points or 0.26%.
The dramatic plunge in sterling "looks like it was an algorithm-driven flash crash,” Angus Nicholson, markets analyst at IG, told Bloomberg. “Given low volumes in the Asian session, it would have forced other algorithms to join in and magnify the fall.”
Losses in Australia were led by the gold sector -2.3%, utilities -1%, telecoms -1% and metals & mining -0.6%. The energy sector, +0.7%, resisted the downtrend.
Hong Kong's Hang Seng dipped 0.24% and Japan's Nikkei 0.2%. China's Shanghai Composite remained closed for a public holiday.
Crude oil futures were flat at US$50.44 a barrel. Gold futures were $7.10 or 0.57% firmer at US$1,260.20 an ounce. The dollar was buying 75.71 US cents.
Markets don't like flash crashes. Makes people nervy and trigger-happy. May see an increase in volatility. The inquest will take a while to run its course. Trading: I began the day by flooding the bathroom while changing a tap washer, so there wasn't much the market could do to make things worse. As it was, I had a fairly straightforward session with bounce wins in BGS and MOY, which will help pay for the plumber who took over when the water reached the ceiling. [Shakes head, sighs, wonders how to explain the damp carpet to his wife.]
