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Nov 22, 2011, 09.03 AM IST
The US worries over debt in both the US and Europe overcame Wall Street, sending stocks into a tailspin as investors flocked for the exits ahead of the thanksgiving holiday.
The US worries over debt in both the US and Europe overcame Wall Street , sending stocks into a tailspin as investors flocked for the exits ahead of the thanksgiving holiday.
Though considerably off the worst levels of the day, the sell-off was still good enough to take 2% off the Dow Industrials and nearly as much from the Standard & Poor's 500 and the Nasdaq.
US economic data:
Home sales rose 1.4% last month to a seasonally adjusted annual rate of 4.97 million.
Data to watch out for:
The US GDP for the third quarter is expected to come in marginally lower at 2.4 % versus 2.5%.
US debt deadlock:
The US' Congressional Super Committee has announced that it has failed to reach a deal in reducing the deficit.
Meanwhile, ratings agency Standard & Poor's says it will not downgrade the US government's credit rating because a Congressional Committee failed to come up with a plan to trim deficits by at least USD 1.2 trillion over the next decade. S&P in August cut its rating of long-term US treasury securities by one notch from AAA to AA+, the first such downgrade of US government debt in history.
Moody's states that its credit rating for the US government remains triple-a with a negative outlook.
However, Fitch warns that a failure to reach an agreement would likely result in a "revision of the rating outlook to negative, which would indicate a greater than 50% chance of a downgrade over a two year horizon."
European markets fell to their lowest close in nearly seven weeks, as US political deadlock on its deficit added to investors' worries about the Euro zone's debt crisis, made worse by Moody's warning on France.
There seems to be no end to the Euro zone's troubles. The sharp rise in bond yields is taking a toll on France's credit ratings.
Moody's has warned that it could cut the outlook on France’s triple-a rating from stable to negative, if the situation does not improve.
The rating agency also cited weaker growth prospects for the warnings.
Euro zone finance ministers are ready to give Greece its next tranche of aid.
After meeting the newly appointed Greek Finance Minister the president of the European Council Herman Van Rompuy said officials are ready to sign off on a critical 8 billion euro payment to Athens.
Van Rompuy said all of Greece’s political parties needed to fully back the steps that the government is taking and called on all EU institutions to do their part as well. Analysts say that’s a possible reference to the ECB, although he didn’t name the central bank.
At 7: 40 am (IST), Asian markets were trading flat to negative. China's Shanghai Composite was down 0.40% or 9.57 points at 2,405.56. Hong Kong's Hang Seng fell 0.38% or 69.47 points at 18,156.38.
Japan's Nikkei was flat at 8,343.71. Singapore's Straits Times was flat at 2,698.57.
The rupee closed at an all-time low on end-of-day terms at 52.16 to a dollar.
The dollar gains versus its major peers on demand for safety. The dollar index was at 78 levels.
Crude prices slid nearly 2% on fears that the inability to sufficiently tackle debt problems in Europe and the US will stunt global economic growth and curb demand for petroleum. Brent is currently trading at USD 106 per barrel.
Gold dropped more than 2% to USD 1,680 per ounce, hit by margin selling related to an equities sell-off. Silver tumbled more than 4%.
The winter session of parliament begins today. While the work agenda includes 31 pending bills, the opposition seems set to back an adjournment motion by the left on price rise.
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