Global markets in a crash mode

Moneylife Digital Team 01 June 2012

The US job creation data, having come far weaker than expected, energy, metals and stocks are on a massive selloff mode

Dow futures are down by 200 points in premarket trade as global markets have entered a crash mode. The markets have been gripped by the fear of severe slowdown ahead. This is reflected in the commodity markets as well. Crude oil has crashed by 6% today which follows a huge down move in late April and early May. Natural gas has crashed by about 7%. Copper, Nickel, Lead and Zinc are all down by about 3%.

The global markets have been weak for the last couple of months now, but the crash today has come about because of extremely poor jobs data released today. According to the government data, the economy created far fewer jobs than expected.During May, payrolls expanded by only 69,000 as against projected growth of 150,000. Even April’s employment gain was revised sharply down to just 77,000.

Treasuries rose which drove yields to below 1.50% for the first time, as more investors move away from stocks and switch to bonds. This made investors to tap the classic safe-haven as gold prices jumped $30 to about $1,580, following the yellow metals recent slump.

While Asian markets were influenced by lesser-than-expected growth in the China's manufacturing, troubles in Spain and Ireland affected the sentiment in Europe.

Spain Cajas are in big trouble and the Spanish Central Bank had agreed on bailing out troubled Spanish banks, prompting fears that Greece is only the tip of the iceberg.

European market were mostly lower on lingering fears over the economies of Greece and Spain. Key benchmark indices in France, Germany and London were down by 0.7%-2.1%.

Most Asia markets ended lower after data indicated that momentum is slowing in the Chinese economy. Key benchmark indices in Hong Kong, Singapore, Taiwan, Japan and South Korea were down by 0.4% to 2.7% while China's Shanghai Composite was flat.

The HSBC China manufacturing Purchasing Managers' Index (PMI) retreated to 48.4 from 49.3 in April - its seventh straight month. India's manufacturing sector kept up its steady expansion in May with the HSBC manufacturing PMI, slipped marginally to 54.8 in May from 54.9 in April.

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