Option Millionaires

[ronnies]

Investors stampede from risky assets, Tokyo hits 28-year low OUCH

TOKYO (Reuters) - Asian shares dived on Monday, pushing the broad Tokyo market to a 28-year low, on fears of a nightmare scenario of euro-zone breakup, U.S. economic relapse and a sharp slowdown in China.

Tokyo's Topix index <.TOPX> lost as much as 2.4 percent to 693.26, a level not seen since late 1983, according to Reuters data, while the Nikkei average <.N225> of major stocks tumbled 2 percent. The Nikkei last week marked its ninth straight week of losses, the longest such losing streak run in 20 years. <.T>

The MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> fell by as much as 2.4 percent to 2012 lows, down 16 percent from this year's peak, continuing a rout of global stocks sparked on Friday by weak U.S. jobs data.

And U.S. stock futures pointed to yet more selling when investors wake up in North America on Monday, with S&P 500 futures down 0.7 percent in Asian trade.

"Investors are just fleeing risk assets," said ATI Asset Management chief investment officer Simon Burge.

"Bond yields are at an all-time low. Even in the global financial crisis we didn't see bond yields at the levels that they have reached now ... This is a flight from risk assets that is unprecedented," Burge said.

The benchmark 10-year Japanese government bond yield fell below 0.80 percent to its lowest since July 2003. Ten-year JGB futures prices jumped to a 19-month high.

U.S. and German government bond yields had both hit record lows on Friday, with 10-year German yields dipping to 1.127 percent and 10-year Treasury yields touching a historic low of 1.442 percent.

The euro and the Australian dollar, which is closely linked to risk appetite, staged only meek recoveries on Monday from their battering on Friday when the Aussie hit eight-month lows. The yen, perceived as a safer currency in times of crisis, retreated only slightly from its highs against the dollar.

The CBOE Volatility index <.VIX>, which measures expected volatility in the Standard & Poor's 500 index <.SPX> over the next 30 days, jumped nearly 11 percent to its highest since mid-December on Friday, reflecting mounting risk aversion.

POLICY RESPONSES EYED

Analysts said the flight to bonds was expected to continue until clarity emerged on issues such as the outcome of Greek elections due on June 17 and the recapitalization of European banks, now in the shadow of a Spanish banking crisis.

"It's not an issue of risk-on or risk-off anymore, it's nervousness all over until a clear direction emerges on a long-term trend," said Hisamitsu Hara, chief foreign exchange manager at Bank of Tokyo-Mitsubishi UFJ.

U.S. jobs growth braked sharply for a third straight month in May and the jobless rate rose for the first time in nearly a year, with 69,000 jobs added to payrolls last month, the least since May last year.

The weak data followed poor Chinese manufacturing and dismal European data on factory activity, rattling markets that had already been on edge over the deepening euro-zone crisis. The numbers fuelled speculation that the U.S. Federal Reserve would have to launch further monetary stimulus to shore up growth.

The median forecast from 15 primary dealers, which do business directly with the Fed, showed a 50 percent chance that it would eventually launch another round of quantitative easing, according to Reuters' polling.

The yen stood at 78.18 yen against the U.S. dollar on Monday, off a 3-1/2 month high of 77.65 yen hit on Friday. It stood at 96.88 against the euro, after climbing to its highest since December 2000 of around 95.59 yen on Friday.

The euro was at $1.2396, recovering from Friday's trough of $1.2288, its lowest in nearly two years.

"If the European situation worsens, then the global interest rate and policy solutions would require coordinated actions by the Bank of Japan and the Federal Reserve to assure access to U.S. dollar money markets, otherwise risk a contraction in global trade," said Richard Hastings, macro and consumer strategist at Global Hunter Securities.

COMMODITIES SLIDE

Analysts are closely watching several monetary policy meetings due this week, including the European Central Bank on Wednesday and Bank of England on Thursday, for clues on their responses to vulnerable global growth.

Spot gold edged 0.3 percent lower to $1,620.49 an ounce on Monday, largely holding its ground after recording its biggest one-day rally in more than three years on Friday.

U.S. crude futures fell 1.5 percent to $81.98 a barrel, after hitting its lowest level in almost eight months on Friday. Brent dropped 1.4 percent to $97.08.

Worries about slowing global growth also pushed Shanghai copper down more than 3 percent to a new 2012 low of around 52,450 yuan ($8,200) a tonne.

Heightened risk aversion pushed up the cost of insuring against corporate and sovereign defaults in Asia, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 13 basis points.

(Additional reporting by Victoria Thieberger in Melbourne; Editing by Mark Bendeich)
@yahoofinance on Twitter, become a fan on Facebook


All Comments

375 comments

Popular Now
Newest
Oldest
Most Replied

Dodge Ram Van Man
Dodge Ram Van Man • 1 hour 20 minutes ago

Oil is less then $83 a barrel and yet we pay $4+ a gallon.

bigdaddydrj
bigdaddydrj 1 hour 18 minutes ago

think about it people. Its about greed!

joe101
joe101 1 hour 9 minutes ago

i want to say its bush fault but he actually had the prices low when he was president him being an oilman and all.

ding
ding 1 hour 6 minutes ago

What does that tell you?

More
Reply
michael
michael • Toronto, Canada • 24 minutes ago

I'd leap out my window.......but I live in a basement.

Socrates
Socrates 19 minutes ago

Just walk up to the roof!

no
no 18 minutes ago

So do I, no kidding!

Insidious Banana
Insidious Banana • 1 hour 17 minutes ago

Want a good tangible investment? Raise a cow.

JS
JS 38 minutes ago

and the government will pay you for raising it!

WH
WH 30 minutes ago

actually, pork prices have tripled in prices recently and pig farmers are making easily $10 G a month ....

RexW
RexW 21 minutes ago

Depending where you are, you may have to pay a FART tax on each critter

More
Reply
Justin Case
Justin Case • 1 hour 22 minutes ago

the news i want to hear is.. OIL takes a HUGE tumble.. down to 85 cents a barrel !

Thomas
Thomas 44 minutes ago

yeah.."at a 28 year low" HAHAHAHAHAH!

David
David 6 minutes ago

Get drunk and watch Looney Tunes on mute, works for me.

cassie
cassie • Indianapolis, Indiana • 31 minutes ago

Now they want to do quantitative easing round 3 which will further devalue the dollar making all of our savings worth less and the cost of gas and food higher. Sometimes I think their goal is to break the middle class through the printing of money.

Markus
Markus 5 minutes ago

Wasn't Operation Twist QE3?

Google It
Google It • 49 minutes ago

The shifts about to hit the fan....

Ninety-Nine Percent
Ninety-Nine Percent • Atlanta, Georgia • 1 hour 51 minutes ago

Don't worry about the return ON your money. Worry about the return OF your money.
Will Rodgers.

Tims
Tims • 1 hour 29 minutes ago

is this the beginning of the domino effect for the whole world?

wcmillionairre
wcmillionairre • 1 hour 18 minutes ago

It's going to be a FUN WEEK, folks!
I keep remembering that scene from Dr. Strangelove, with Slim Pickins riding that A-bomb.

YEE-HAW!

Bruce
Bruce • El Cajon, California • 1 hour 35 minutes ago

The domino effect. It has begun.

Jonny Dillinger
Jonny Dillinger • 10 minutes ago

I'm sure this was all planned at the Bilderburg meeting...

ub40
ub40 • 37 minutes ago

It's not a global economy, it's a global Las Vegas.

Ballsy
Ballsy • 1 hour 28 minutes ago

You think this is gonna be bad, wait till Greece unloads from the EU.....

Great G
Great G • 15 minutes ago

Now is the time to only buy American made products. The world economy is crumbling, we should at least keep our own country alive. Keep American businesses running, and Americans employed. Start looking for the tag that says "Made in USA"

ub40
ub40 • 1 hour 29 minutes ago

Look on the bright side. You might be able to sleep-in in the mornings.

Colonel
Colonel • 1 hour 33 minutes ago

Oh well, I guess by the time I am 94 my mutual funds will return to what I bought them for. I am 52 now.

ub40
ub40 • 25 minutes ago

The sad truth......there is nothing the working class can do about this.
It'll be meet the new boss..same as the old boss.

The Answer To 1984 Is 177 ...
The Answer To 1984 Is 177 ... • 1 hour 27 minutes ago

The shoes are dropping. Mainly thanks to currency devaluation in relation to the printing up of fiat currency. All those damned derivatives.

FormerDemocrat
FormerDemocrat • Portland, Oregon • 50 minutes ago

How's that Facebook stock treating that artist who invested $200 Hundred Million in it? Einstein!

Adam
Adam • 1 hour 25 minutes ago

optimist.
pessimist.

realist.

More
Post a comment
Top Stories »

Investors stampede from risky assets, Tokyo hits 28-year lowReuters

Asian shares dived on Monday, pushing the broad Tokyo market to a 28-year low, on fears of a nightmare scenario …
Analysis: Economic pain takes toll on U.S. earnings forecastsReuters
Europe mulls major step towards "fiscal union"Reuters
BP is free to sell TNK-BP stake: sourceReuters
Spain calls for new euro fiscal authorityReuters

AdChoices
Online $7 Trades! Click to find out more!

Recent Quotes
Portfolios

Recent Quotes Symbol Price Change % Chg
AAPL
560.99 -16.74 -2.90%
AAPL
Search for share prices
Save List to Portfolio »
Trading Center

Trade Free for 60 Days + Get up to $600 cash.

Switch to Scottrade and Get $100 Back*

Trade Free for 60 Days Plus Get up to $500
Compare Brokers »
Featured Content

Greek Exit Will Lead to Massive Euro Reversal: Najarian
Breakout - Thu, May 31, 2012 12:38 PM EDT
Elections in Ireland, Greece Signal Backlash Against Bondholders
Contrary Indicator - Thu, May 31, 2012 9:43 AM EDT
Zuckerberg Should Stay on His Honeymoon
Daily Ticker - Thu, May 31, 2012 11:57 AM EDT

Yahoo! Finance on Facebook
YAHOO! FINANCE ON TWITTER