US equity markets were pummeled overnight on concerns Greece’s economic hardships are yet to be contained. Equity markets were hit hard with the DOW and the broader S&P suffering losses of 2 percent and 2.4 percent respectively.

Although the finer points of Greece’s bailout have been seemingly been ironed out, the mood turn sour on speculation not all 15 EURO participant nations will be willing to participate.The bailout package announced on Sunday evening totals 110 billion Euros over the next 3 years – 80 billion of which will be put up by Euro members. Up to this point the focus had been on Germany’s reluctance to participate, however Europe’s largest economy on Monday agreed to chip in 28 percent of the total bailout package over a 3 year period. According to Euro-group President Jean-Claude Juncker, the first instalment will be made before May 19. Fears of division amongst Euro participants may induce contagion for other European nations in dire straits – with Spain, Portugal and Ireland the next potential contenders for the dole queue. The balance of risk fell to the perceived safety of the Greenback and Yen by default Gold’s latest burst of energy hit the wall falling to overnight lows of US$1167.

China’s latest steps to curb bank lending also remained in the spotlight. The Chinese government increased the amount of deposit reserves required by banks by 50 bps in an effort to reduce inflationary risks and the likelihood of an asset bubble developing.

By default the Aussie got hammered as risk aversion became the new appetite, with the local unit falling to overnight lows of 90.7 US Cents. At time of writing the Aussie is buying 91 US cents representing a loss of over 170 pips in the last 24 hours and remains in a vulnerable position as we near what’s shaping up to be a dreadful day on Aussie equities.

Yesterday’s rate hike also failed to give the Aussie some steam, with the local unit dropping in the ensuing minutes as markets participants speculated interest rates will stay put for the near term as governor Stevens indicated borrowing cost have returned to average levels. As widely predicted, yesterday the Reserve Bank of Australia lifted interest rates for the 5th time since October by 25 bps to 4.5 percent