Financial markets tumbled in US morning amid disappointing macroeconomic data and lingering concerns over the Eurozone. Wall Street opened lower with both DJIA and S&P 500 losing more than -1.0%. In the commodity sector, crude oil slumped with the front-month WTI crude oil breaking below 90 and diving to 87.49, a level not seen since October 2011, while the equivalent Brent crude contract plummeting to as low as 103.23. Gold also tumbled as the euro declined to 1.24 against the greenback. The yellow metal initially dropped to as low as 1530.4 before recovering to around 1550. Further weakness is expected in the near-term.
Italy's failure to meet its target at bond auctions raised concerns over the country's ability to access funding from the market. The country auctioned 5.73B euro of 5-and 10-year bonds, compared with the maximum of 6.25B euro. Yields for the 10-year debt increased to 6.03%, the highest since January 30. For Greece, the EU requested the debt-ridden to show more determination to reduce its budget deficit and stated that it will review the progress after the election in mid-June. Yet, it remains uncertain whether Greece would eventually stay in the bloc.
Confidence in the Eurozone weakened more than expected. Economic confidence fell to 90.6 in May from 92.8 a month ago. The market had anticipated a milder dip to 91.9. Industrial confidence slipped to -11.3 from -9 in April, compared with consensus of -10.2, while services confidence slid to -4.9 in May from -2.4 in April, compared with market forecasts of -2.8. Consumer confidence dropped to-19.3, inline with consensus. In the US pending home sales surprisingly declined -5.5% m/m in April, following a +4.4% gain in March. The market had anticipated a milder drop of -0.1%.
Reuters estimated that Saudi's oil output has reached 10.1M bpd in May while that in Libya dropped modestly to 1.42M bpd, compared with pre-war level of 1.55M bpd. Indeed, Saudi's oil minister Ali Al Naimi has recently raised his concerns about high oil prices and emphasized that the Kingdom could increase supply with its spare capacity of 2.5M bpd and working inventory of 80M barrels.