Stocks Drop on Poor Demand for German Bonds | November 24, 2011

Asian Markets are set to open lower after U.S. stocks fell overnight, driving the Dow Jones Industrial Average down, as the cost of insuring European government debt against default rose to a record on concern the region’s crisis is worsening.

The declines were driven by worrying developments in Europe, where demand at Germany’s auction of new 10-year government bonds was surprisingly weak, bringing the euro zone’s debt fears closer to the core of the region. The disappointing demand lifted yields on Spanish and French government bonds as well.

The Dow Jones Industrial Average fell 236.17 points, or 2.05%, to 11257.50, while the Standard & Poor’s 500-stock index dropped 26.25 points, or 2.21%, to 1161.79. The technology-oriented Nasdaq Composite fell 61.20 point, or 2.43%, to 2460.08.

The EURUSD (see chart above) fell to a six-week low against the dollar after Germany received insufficient bids at a bond auction, adding to concern Europe’s sovereign-debt crisis is driving investors away from the region’s assets. The Euro dropped 1.2 percent to $1.3338 at 4 p.m. New York time and touched $1.3320, the least since Oct. 6. Prices last traded at 1.3349

WTI Oil Futures fell as much as 2.3 percent after Germany failed to get sufficient bids at an auction of benchmark 10-year bunds today to reach its maximum sales target. European services and manufacturing output contracted for a third month in November as the worsening debt crisis pushed the region closer to a recession. Crude oil for January delivery on the New York Mercantile Exchange fell as much as $2.25 to $95.76 a barrel and last traded at 95.84.

Gold eased below $1,700 as investors moved to the US dollar on euro-zone concerns, but futures recovered from their earlier losses as some traders viewed the declines as a good opportunity to buy. Prices last traded at 1695.50

Last Traded
SPI 200 future 4039
S&P500 Index 1161.79
Dow Jones 11257.50
FTSE 100 Index 5139.78

Last Traded
Gold 1695.50
Oil (Nymex) 95.84

Last Traded
AUDUSD 0.9692
EURUSD 1.3349
GBPUSD 1.5530
USDJPY 77.30
Bloomberg, Dow Jones News