Pessimism spread through markets after the earlier wave of optimism that had spread through global markets, where traders were feeling optimistic after the G20 announced over the weekend that they will provide support to Europe in order to prevent the debt crisis from spreading in Europe, while the G20 also called for a bigger role by the IMF to ease tensions in the debt-laden euro zone region.
Nonetheless, a German official said that markets shouldn’t feel too optimistic that European leaders will be able to find a final resolution to the debt crisis at next week’s EU Summit, which spread a huge wave of pessimism among traders that drove them away from higher yielding and risky assets, as equity indexes in Europe and the United States dropped, and commodities also declined.
As for FOREX markets, traders also shunned risky assets and target lower yielding assets, where the U.S. dollar erased earlier losses and gained back against major currencies.
Stocks in the United States were lower by opening on Monday, where the Dow Jones Industrial Average was down by nearly 1.15% to trade around 11,510, while the S&P 500 index was down by nearly 1.10% to trade around 1211. European stock indexes were also lower before closing on Monday, where FTSE 100 was down by nearly 1% to trade at 5411 and the DAX was down by nearly 2.20% to trade around 5835.
The U.S. dollar fell against a basket of major currencies on Monday, where the U.S. dollar index was trading at 77.11, compared with the opening level at 76.74. The Euro fell against the Dollar, where the EUR/USD pair traded around $1.3761, compared with the opening level at $1.3873, the British Pound also fell against the Dollar, where the GBP/USD pair traded around $1.5775, compared with the opening level at $1.5816, and the U.S. dollar fell against the Japanese Yen, where the USD/JPY pair was trading around 76.70, compared with the opening level at 77.22.
Gold prices were little changed on Monday to trade now around $1682 an ounce and crude oil prices fell to trade around $86 a barrel.
