Global markets, commodities decline on Spain, Italy woes

**Risk on unwound on Monday as euphoria over Spain banks bailout died down

Spain 10-year yield moved back around 6.5% from 6% earlier in the session yesterday

Markets realized that euro 100 billion will subordinate current Spanish debt and will add significantly to Spain’s debt/GDP

Market also worried about an eventual bailout request from Italy; Italian 10-year yield was above 6%, rising 25 basis points yesterday

Globally all eyes are now on euro 4.5 billion Italian BTP auction on Thursday

Cyprus with significant Greece exposure indicates yesterday that it is likely to request for a bailout by month-end

Reports yesterday suggested that lay out contingency plans are being discussed to counter a possible Greece exit

Reports also suggested that officials are discussing capital controls across EU in case Greece decides to exit

US markets at close: The Dow Jones fell 1.1% to 12,411.2 and S&P 500 Index was down 1.3% to 1,308.9. Nasdaq Composite slipped 1.7%

European markets at close yesterday: DAX gained 0.2% whereas CAC declined 0.3% and FTSE ended flat. Italy tanked 2.8% and Spain was down 0.5%.

Asia today

Nikkei lost 1.4%.

Hang Seng and Taiwan Weighted were down 1% each

Kospi was down 0.9%

Shanghai and Straits Times fell 0.6%

SGX Nifty declined 0.4% at 5,023

Currencies

Euro saw a sharp intraday reversal yesterday

Euro fell to 1.24 levels from a high of 1.267 intraday as against the US dollar

Dollar index got back above 82 after hitting an intraday high of 82.6

Commodities

Brent crude fell sharply yesterday

Brent crude hit intraday high of USD 102.2 a barrel, before closing at USD 98 a barrel

It extended losses today, hitting a low of USD 96.6 a barrel. Its low in 2012 is USD 95.6 a barrel  

WTI crude was down a further 1.1% at USD 81.7 a barrel today

OPEC meet on Thursday is in focus

Gold unwound, falling to USD 1590 an ounce from above USD 1600 an ounce yesterday

LME Copper rose 1.7% yesterday (on China imports), but it declined 1% today

What to watch out for

UK Industrial Production

US NFIB Biz Optimism Index

US Import Price Index