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Doubts about Europe's ability to manage its debt hammered global markets Monday, pushing the dollar up sharply and dragging down commodities and stocks.Following a three-notch cut of Greek debt by Fitch Ratings Friday, which pushed the country's rating deeper into junk status, rival Standard & Poor's revised its outlook for Italy to "negative" from "stable" on Saturday.
"Removing equity exposure amid sovereign debt concerns is highlighting a headline-driven morning," said Andre Bakhos, director of market analytics at Lek Securities in New York. "We are experiencing another cycle of concerns that is causing investors to question the risk-reward scenario in equities. Until there is better visibility, investors will play their cards close to the vest."
The dollar [EUR=X 1.4042 
-0.0089 (-0.63%) 
] hit a two-month high against the euro. The euro also hit a record bottom against the Swiss franc, as investors worried about the potential for the eurozone's main currency as the region's sovereign debt problems mounted.
-0.0089 (-0.63%) ] hit a two-month high against the euro. The euro also hit a record bottom against the Swiss franc, as investors worried about the potential for the eurozone's main currency as the region's sovereign debt problems mounted.Commodities often move in reverse to the dollar and correspondingly with the euro.Oil and copper fell 3 percent, extending the sharp swings seen through most of May. Grains markets also gave up early gains, pushing the 19-commodity Reuters-Jefferies CRB index down more than 1 percent.
Gold went in the opposite direction, however, climbing to its highest level in nearly two weeks.
"We remain negative towards most commodity markets," said Edward Meir, analyst for metals and energy markets at MF Global in New York. "Bulls have to contend with a backdrop of a stronger dollar, weakening macro readings from a number of countries, and interest rate increases that still loom on the horizon," Meir wrote in his daily commentary.
U.S. crude oil [CLCV1 97.24 -2.86 (-2.86%) ] shed more than $3.50 per barrel to touch as session low of just above $96.50.
-2.86 (-2.86%) ] shed more than $3.50 per barrel to touch as session low of just above $96.50. Analysts said the market may be on track for further losses if negative developments out of the eurozone news kept pounding the euro.
"Crude oil has not been able to find any follow-through buying over the last 10 days and without new fundamental developments it is likely to be harder to find strong fresh buying into crude oil if the Euro weakens further," Olivier Jakob with Petromatrix said London's Brent crude futures [LCOCV1 109.99 -2.40 (-2.14%) ] fell more than $3.80 to an intraday low of $108.58 a barrel.
-2.40 (-2.14%) ] fell more than $3.80 to an intraday low of $108.58 a barrel.The Dow Jones industrial average [.DJIA 12364.95 -147.09 (-1.18%) ] dropped over one percent, while the the Standard & Poor's 500 Index [.SPX 1316.57 -16.70 (-1.25%) ] and Nasdaq Composite Index [NDX 2314.00 -37.43 (-1.59%) ] had similar declines.
-147.09 (-1.18%) ] dropped over one percent, while the the Standard & Poor's 500 Index [.SPX 1316.57 -16.70 (-1.25%) ] and Nasdaq Composite Index [NDX 2314.00 -37.43 (-1.59%) ] had similar declines. In Europe, the ruling Spanish Socialists were hit by stinging losses in local elections and now face walking a tightrope between voter anger over sky-high unemployment and investor demands for strict austerity measures.
Investors are increasingly concerned that voter rebellions against austerity plans could cause bailouts and budgetary pact agreements to unravel, leaving large swathes of debt in jeopardy.
Did crude oil fall 3.50$ per barrel?
A. TRUE
B. FALSE
Did Doubts about Europe's ability to manage its debt hammered global markets Monday?
A. TRUE
B. FALSE
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