The Asia-Pacific equity markets were crushed overnight, and in mid-session today the European bourses are under extreme pressure. There are many issues on the table, but the heart of what is troubling investors is the possible bankruptcy of the global financial system.

Equity markets in Australia (-1.95% to 4910.1), Shanghai (-3.43% to 2779.5), Hong Kong (-3.81% to 21174.8), India (-4.66% to 12714.8), and Japan (-1.96% to 12754.6) all encountered serious selling as traders fled from Financials into government bonds.

The Sensex 30 of India dropped about -1% in the closing minutes. It has plunged about -10% since Thursday morning.

At this point in the session (6:45am ET, 1145 GMT), the European bourses are also under the same pressure. With the prices at 1000am GMT in brackets, the UK FTSE is down -1.94% to 5197 (-1.22% to 5236); French CAC -2.21% to 4051 (-0.86% to 4107); and the German DAX -2.05% to 6072 (-1.70% to 6095).

The $USD and Euro/USD futures are at 0.71665 and 1.5995, respectively, which is a much weaker USD since midnight. That is pushing commodity prices higher this morning.

Crude Oil futures have opened up +1.25/bbl to 147.03.

Precious metal prices (spot) at 6:45am ET for gold, palladium, platinum and silver are (compared to yesterday morning/Friday’s close): 984.43 (958.94/963.7); 447 (444/448.5); 2008 (2007/2027); and 19.355 (18.69/18.79).

So, one can see that the speculators are driving gold and silver and oil higher off the weaker USD.

DJIA futures are very weak, presently (6:50am ET) at 10908, down -127. Possibly lost in the present financial system panic are serious economic results like the hyper-inflation of the UK and the mega-billion bankruptcy of Spain’s biggest real estate developer/builder.

Comments & Outlook

It used to be that I could report and comment on markets daily, but in recent days there is such a flood of breaking news that I could do this every three hours and not keep up. For the long-term oriented trader, particularly the happy ones who fled to cash many months ago, it’s best to stand aside.

There may appear to be great value in some of the Financials, but what you really are looking at are depressed prices, and nothing more. In some cases, those prices will go to zero, so just because a price is low doesn’t mean there is value. In fact, the equity in many of the financial stocks cannot be assessed because nobody yet knows the extent of the losses or the timing of a turn in the real property market or the future of the interest rate market.