Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US futures brokerage MF Global has filed for bankruptcy protection after it revealed US$6.3 billion of exposure to European sovereign debt, sparking a collapse in its share price and a revolt by its counterparties.
MF Global has US$39.7 billion of debt and US$41 billion of assets. Its unsecured creditors include JP Morgan and Deutsche Bank. The New York Times described MF Global as a Lehman Brothers in miniature.
It was managed by former Goldman Sachs boss and New Jersey Governor Jon Corzine, who geared up the broker last year to become an investment bank that bet on European sovereign debt. See more here at Bloomberg.
US and European stocks fell 1-3% as doubts about the likely success of last week's European rescue package continue to mount. See more here at Bloomberg.
Greece's decision overnight to hold a referendum on the latest bailout has further unnerved investors who worry a rejection could trigger an uncontrolled default and ejection from the Eurozone. See more here at Reuters.
This would crystallise massive losses for banks and potentially spark a contagion of losses and bank runs across Europe, officials have warned repeatedly in recent months.
Meanwhile, inflation figures overnight showed European inflation still high, dashing hopes the European Central Bank may be able to give some relief to the Eurozone with a rate cut on Thursday. See more here at Reuters.
The euro fell sharply on the doubts about Europe. See more here at Reuters.
Also, the New Zealand dollar fell against the US dollar to under 81 USc as investors took risk off the table. See BNZ's currencies report on our site.
However, the Kiwi dollar rose against the yen after the Bank of Japan intervened yesterday to sell the yen lower to try to protect its struggling export sector.
Markets in this part of the world will be watching the Reserve Bank of Australia closely at 4.30 pm, just before the Melbourne Cup is run, where it is expected to cut its official rate from 4.75%.
Australian borrowers will watch closely to see if it is passed on by banks in the form of lower floating mortgage rates, The Australian reported.
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12 Comments
Bearish news all round today. Iron ore prices down. China is cutting back on spending, milk down too.
http://www.marketwatch.com/story/iron-ore-price-drop-may-hit-australia-hard-2011-10-30
Heard a doozy of an article on BBC service this morning, about free-riding hedge funds making money by buying cheap bonds from Greece then refusing to take a haircut on them (which they are entitled to do). There's an article here: http://www.telegraph.co.uk/finance/financialcrisis/8598657/Vulture-fund…
Also another article on Greek corruption: http://blogs.telegraph.co.uk/finance/ianmcowie/100012894/fast-cars-and-…
"Things will become unglued in a hurry if Greek voters decide to tell the EU where to go"
http://globaleconomicanalysis.blogspot.com/
But but they said they had agreed to agree on solving their debt problems .....don't tell me they were lying ....again!
It's a great start toward a true democracy though. Pity the PM spent the last few years BS'ing the public, about an enigmatic return to surplus. Politicians around the world BS the public, right up till the light at the end of the tunnel turns out to be a freight train comming. Then abdicate all responsibility, and pass the buck.
Hope the IMF'rs (Greeks) tell them to stick it.
You gotta see this, hilarious.
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