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90 seconds at 9 am: Asian, Australia stocks slump after Greek, French anti-austerity votes, but US, European markets flat to firmer after Spanish bank bailout; CBA's Ross McEwan leaves for RBS

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Here's my summary of the key news overnight in 90 seconds at 9 am, including news Asian and Australian stocks fell more than 2% late yesterday on fears votes against Europe's austerity programme in France and Greece would further destabilise markets.

However, US and European stocks were flat to slightly firmer as investors bet that either France's new socialist President Francois Hollande would reneg on his pledge to end the austerity under pressure from markets and Germany, or that central banks in Europe and America would restart their printing presses to rescue markets in response to any further slump.

German chancellor Angela Merkel said she would welcome Hollande with open arms, but reiterated she was against government stimulus to power growth. Hollande said after his victory speech that austerity was not inevitable and a backdown is seen as unlikely before parliamentary elections on June 10 and June 17.

US stocks were flat in late trade while Eurostoxx rose 1.5%, although the key London market was closed for Labour Day and French markets are also closed tonight for a public holiday.

In line with the more benign reaction on US markets, the New Zealand dollar bounced off its lows from late yesterday of around 79.1 USc to be around 79.5 USc in morning trade. Wholesale interest rates fell to fresh record lows yesterday, with the 2 year swap rate falling to 2.49%, below the current Official Cash Rate.

See here our interactive chart of wholesale swap rates, which are the basis for fixed mortgage rates. They show the rates at new lows and down more than 60 basis points since late March.

Financial markets are now pricing in 35 basis points worth of cuts in the Official Cash Rate over the next year, this Bloomberg index shows.

However, the oil price fell sharply again overnight to a 3 month low on worries about what the financial turmoil may do for the global growth outlook. The oil price has now fallen 11% since late February, Bloomberg reports.

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Also, Reuters reported Spain announced it would use public money to bail out Spain's fourth largest bank, Bankia, which is the most exposed to the implosion in the Spanish housing market. Spain's new centre-right government, which had previously said it would not bail out banks, said it would spend more than 7 billion euros to bolster the bank's capital. This helped boster Spanish banking stocks, Reuters reported.

Elsewhere, New Zealand banker Ross McEwan has decided to leave his job running Commonwealth Bank of Australia's retail division to run Royal Bank of Scotland's retail arm in Britain, the Sydney Morning Herald reported.

Last year McEwan lost out to fellow New Zealander Ian Narev in the race to succeed New Zealander Ralph Norris as the CEO of Australia's largest bank.

 

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4 Comments

I haven't had anything decent

I haven't had anything decent from Richard Duncan for a while and this is probably why, he has been writing a book. Gives your a precis of each chapter.
 
The thing I don't really agree with is this:  "The price the United States ultimately pays for abandoning sound money may be devastatingly high, both economically and politically". 
 
The US moving off the gold standard was a way to dupe the world and allow it to keep collecting a greater share of the diminishing resource pie. The writing was on the wall when the growth rate in population turned in 1961, from that time on the money system in place could not cope with a diminishing input of new unecumbered debt(people) so a new system had to be introduced that would allow a disconnect from resources and money. America has kept its empire, the question becomes: What is their next move to keep it intact?

Some fun!  Dotcom's song on

Some fun!  Dotcom's song on John Bank's memory loss;
 
http://www.youtube.com/watch?v=8CvRSZxqk_I
 
Great mix.

" However, the oil price fell

" However, the oil price fell sharply again.The oil price has now fallen 11% since late Feb "   -  but  because that  sort of news does not help the Peak Oil Theorists one little bit, I would ask bloggers to refrain from further comment lest we hurt their feelings...

Yes indeed. The Eurozone,

Yes indeed.
The Eurozone, Japan and the UK, which together comprise around 37% of total global GDP are either in or flirting with recession. At the same time its looking more likely by the day that both China and the US are in the process of significant slow downs.
Meanwhile, Brent, the acknowledged global benchmark for export crude, hovers around US$113/barrel, a level that a mere 6-7 years ago would have been viewed as astronomical.
You arent the brightest bulb in the box are you?