The sell down of global banking stocks continued overnight, slashing share prices in Europe and trampling US indices before a late session comeback. Copper and oil slid further, and bonds rallied as investors continued to re-price assets in a lower growth environment. Gold surged through resistance and is trading $50 an ounce higher this morning.
Overnight, Societe Generale reported worse than expected Q4 earnings. Investors sold the stock down 13% in response. A report showing European banks hold US $27 billion in exposures to the oil and gas industry, and market talk that formerly oil-rich sovereign wealth funds are selling shares, helped drive investor sentiment to new lows. While none of the fears that have rattled markets are yet realised, the relentless focus on possible risks will likely see another soggy Asia pacific trading session.
Lower copper and oil prices are adding to the pressure in Australia today. Rio’s slight miss on H1 profit, reported after market yesterday, could also shape investor action. Rio’s shares were initially slammed down 9% in London trading, before the focus shifted to the more prudent dividend and capex policies, sparking a rally back to finish down just 1%. Despite company reports from ALE Property, Mesoblast and Alliance Aviation Services, gold stocks are likely to be the brightest sub-sector today.