Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that a shock call by the Greek Prime Minister George Papandreou for a referendum on a new austerity package Greece agreed to last week has unleashed fresh carnage on global stock markets.
European stocks fell 5% and US stocks were down 2.5% in late trade. Most of the gains seen since last week's apparent summit success have been wiped out as investors fear an uncontrolled Greek default and exit from the euro would spark a series of catastrophic bank runs across Europe. See more here at Bloomberg.
Greece's government was in crisis talks this morning with the potential for it to collapse within days, forcing a fresh set of elections. See more here at BBC.
Germany and France called on Greece to stick to its austerity plan, but more than 60% of Greek voters oppose it in opinion polls. See more here at Reuters.
The collapse of US brokerage firm MF Global on Monday has deepened those fears. The broker-turned-investment bank blew up in less than a week after it disclosed US$6.3 billion of exposure to European sovereign debt.
It emerged overnight that MF Global was also using client funds to trade on its own account, which is strictly forbidden for brokerages. See more here at NYTimes.
More than 8,000 Australian investors with Contract For Difference (CFD) accounts with MF Global have had their accounts frozen. See more here at The Australian.
Oil and gold prices fell sharply on concerns the European Financial Crisis is deepening again, further endangering any global recovery.
The New Zealand dollar also fell sharply against the US dollar, as it often does when global stock markets slump and investors move away from assets seen as riskier, particularly those with exposure to commodity prices such as the New Zealand dollar.
It fell to 79.4 USc this morning, having been as high as 82 USc just a few days ago.
However, the New Zealand dollar rose vs the Australian dollar after the Reserve Bank of Australia cut its official cash rate to 4.5% from 4.75%. This tightened the interest rate differential between Australia and New Zealand, where the official cash rate is 2.5% and likely to stay that way until mid-2012. This makes Australia's currency relatively less attractive. The New Zealand dollar rose to around 77 Australian cents from 76 Australian cents.
Westpac and Commonwealth Bank passed on the cut in the Australian cash rate with 25 basis point cuts in their floating mortgage rates in Australia. So far National Australia Bank and ANZ had yet to follow suit by Wednesday morning. See more here at The Age.
Meanwhile, prices fell 1.2% at Fonterra's fortnightly auction of milk powder, extending the run of falls to 9 in the last 10 auctions. See BusinessDesk's article on our site.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.