Broadgate: Market News 16/5
16 May 2012
Gold entered a so-called bear market, dropping for a fourth day, after Greek leaders failed to form a government, increasing speculation that the country may quit the euro. The Dollar Index (DXY) was driven to a record advance. The Dow Jones Industrial Average (INDU) fell to an almost four-month low.
Leaving the euro would be very costly to the Greek economy. Concern over this has offset the results of positive U.S. economic data, with people afraid to hold equities.
A second Greek vote will be held, possibly next month, as gridlock followed a May 6 ballot in which voters rejected the austerity program that underpins the country’s bailout accords. German Finance Minister Wolfgang Schaeuble called the new election a referendum on whether Greece stays in the euro.
Oil dropped to the lowest price in more than six months in New York after U.S. crude stockpiles increased. New York crude has dropped 17 percent since March 1, amid concern that Western sanctions against Iran would disrupt Middle East supplies. Iran and International Atomic Energy Agency inspectors extended a round of negotiations over the Persian Gulf nation’s nuclear program after two days of talks ended in Vienna yesterday with both sides saying progress had been made.
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