Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news European and US bank stocks were hit hard overnight as fresh fears emerged about a Greek default and contagion to Europe's banking system.
Greece missed its budget deficit targets yesterday, sparking fresh speculation that Belgium's Dexia Bank, which is heavily exposed to Greece, may need to be bailed out by the government. Its shares fell 10%. An emergency meeting of the Dexia board is now underway. See more here at Bloomberg.
Dexia has a market value of around 2.5 billion euros, but is currently borrowing 34 billion euros from the European Central Bank because it cannot borrow from other banks.
Meanwhile, incoming European Central Bank President Mario Draghi has admitted that banks in Europe are facing funding problems. See more here at Bloomberg.
German Finance Minister Wolfgang Shauble also doused hopes for a 'bazooka' rescue fund, increasing fears that Europe's politicians will struggle to agree on a uber-plan to fix the euro crisis. There was also a report at FT Deutscheland after the close that Greek Prime Minister George Papandreou had offered his resignation. See more here at FTAlphaville.
Fears that US banks are exposed to the European banks saw their shares hammered too. Citigroup shares fell 9%, Bank of America fell 10% and Morgan Stanley fell 6.7%. Bank of America's website went down sporadically overnight because of heavy customer usage.
Also, America's third biggest airline, American Airlines, saw its shares plummet 33% on talk it will have to file for Chapter 11 bankruptcy protection.
US stocks closed down around 3%. The S&P 500 ended down 2.9% and below the key 1,100 level. See more here at Reuters on US markets.
Meanwhile, investors continued to pile into safe haven assets such as US Treasuries.
They were also helped by the beginning of the US Federal Reserve's 'Twist' programme, where it sells short term bonds and buys longer term bonds.
The US 30 year Treasury yield fell 14 basis points to 2.78%. See more here at Bloomberg.
The New Zealand dollar continued to fall as investors moved away from riskier assets exposed to commodity prices and a sliding global economy.
The New Zealand dollar fell to a 7 month low of 75.3 USc. See more here in BNZ's currencies report on our site.
(Updated with details on Papandreou resignation, S&P 500 closing down 2.9% and below 1,100)
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