Another round of selling hit Asian markets on mounting concerns Greece will default on its debt obligations. Korea’s Kospi was hardest-hit, dropping as much as 6.3% before partially recovering to close down 3.6%. Oil refiners fell more than 10%, as a drop in Korea’s currency, the won, raised costs and cut margins. In Japan, the Nikkei fell 1.1%, and Australia’s ASX 200 eased just .6%. Hong Kong’s Hang Seng sank another 3.4% to 16250, and is down nearly 10% over the last 3 days. China’s Shanghai Composite remained closed for a public holiday.
European markets closed down more than 2.5%, with banks dropping more than 4%. The FTSE fell 2.6%, the DAX sank 3%, and the CAC40 shed 2.6%. News that Dexia, a regional European bank, may need a bailout due to its Greek debt holdings contributed to the losses. Dexia shares fell 22% to 1.008.
A massive late day spike pulled US markets out of deeply negative territory, triggered by a report that suggested European ministers will do more to tackle the growing debt problem. The Dow had dropped more than 250 points, but closed with a gain of 153 points to 10809. The S&P 500 rallied 2.3%, and the Nasdaq soared 3%.
AMR rebounded from yesterday’s plunged, rallying 21% to 2.39. Apple announced an upgraded version its mobile phone, the iPhone 4s, but the stock closed down .6%, on apparent disappointment with the upgrade.
Currencies
The Dollar eased against major currencies, as positive news on the European debt front undermined the flight to safety. The Euro bounced 1.2% to 1.3354, soaring late in the day, and the Pound ticked up .3% to 1.5488. The Australian Dollar suffered a steep drop of 2.3% to .9408, hitting its lowest level in more than a year. The Yen eased .3% to 76.81, while the Swiss Franc gained .6% to .9154.
Economic Outlook
Factory orders unexpectedly declined by .2%, a sharp drop from last month’s 2.1% gain.
Wednesday’s busy economic calendar will include the ADP Employment report, the Challenger job-cut report, the ISM non-manufacturing index, weekly oil inventories and weekly mortgage applications.