Stocks and oil slump as yen, gold rise

Global stocks continued their sell-off on Thursday (February 11th), led lower by big losses for European banks and oil.

Greece’s banking index hit a record low after plunging 15%, while Italian banks also suffered big losses. Societe Generale plunged 14% while shares in Deutsche Bank fell another six per cent.

European indices were in the red as mining and financials weighed heavily, with the FTSE 100 down 2.5 per cent to a fresh three-and-a-half year low. Rio Tinto shares dipped as the firm abandoned its progressive dividend policy following hefty losses.

Germany’s DAX shed nearly three per cent and the CAC 40 in Paris was trading down 3.5 per cent in the morning session.

Losses followed another poor day for Asian markets, with the Hang Seng in Hong Kong slumping four per cent as it reopened after a three-day shutdown for the lunar new year.

Japan’s Nikkei 225 continued its run of losses, sliding a further 2.3 per cent to close at 15,713.39.

Futures trading in New York pointed to a lower open on Wall Street, with S&P 500 futures down 1.8 per cent and Nasdaq futures trading 2.2 per cent lower.

Sentiment has been knocked after Fed chair Janet Yellen warned that financial conditions were less supportive and hinted that the bank will take a much slower path to raising rates.

Turmoil in the markets lifted safe haven assets like the Japanese yen and gold. The yen advanced to its best level in 15 months, with USD/JPY dropping to the 111 handle.

On the Comex in New York, gold for April delivery advanced two per cent to trade around the $1,220 handle.

Oil fell despite a draw on US stockpiles last week. West Texas Intermediate for March delivery was down 2.7 per cent at $26.71, re-approaching a 13-year low.

Total oil inventories fell by 754,000 barrels to 502 million barrels. However the supplies at Cushing, Oklahoma - the key hub for Nymex crude - rose by 523,000 barrels to an all-time peak of nearly 65 million barrels.