Investors backed away from global equity markets on Tuesday, with light volume magnifying moves, as worries about Greece’s future in the euro zone pushed shares lower and lifted safe havens such as gold and U.S. government debt.
Oil prices fell to 5-1/2 year lows CLc1LCOc1, while copper rose for the first session in five, a day after dropping to a 4-1/2 year low.
The Greek government collapsed Monday, setting the stage for elections in four weeks that are likely to be a referendum on painful austerity policies.
Wall Street ended lower, after the S&P 500’s latest record high on Monday. The benchmark index is on track to close a third straight year of double-digit positive returns.
The Dow Jones industrial average .DJI fell 55.16 points, or 0.31 percent, to 17,983.07, the S&P 500 .SPX lost 10.22 points, or 0.49 percent, to 2,080.35 and the Nasdaq Composite .IXIC dropped 29.47 points, or 0.61 percent, to 4,777.44.
The thinly traded market, particularly in Europe, triggered a “magnified reaction to headlines from Greece,” according to Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Banking in New York.
The yield on Greece’s 10-year bond GR10YT=TWEB ticked lower after a sharp move higher on Monday. The left-wing Syriza party, which could win a snap election next month, has said it wants to abandon many drastic spending cuts that are part of a European Union and International Monetary Fund bailout program.
Weaker stocks and concerns about Greece helped push U.S. Treasuries prices higher. The benchmark 10-year U.S. Treasury note US10YT=RR was up 4/32, and its yield down to 2.191 percent.
The euro EUR= held just above a 2-1/2 year low at $ 1.2158 as more lackluster bank lending data and fresh evidence of deflation taking hold in Spain and Italy bolstered the case for further monetary easing by the European Central Bank.
The yen gained 0.9 percent against both the dollar JPY= and euro EURJPY=R as investors sought the traditional safety of the Japanese currency.
Oil dropped in volatile trading, after rebounding somewhat from lows last seen in May 2009. Brent LCOc1 was down 0.7 percent at $ 57.45 after falling to $ 56.74 earlier. U.S. crude CLc1 edged up 0.1 percent to $ 53.67 a barrel.
The two main crude market movers today were oversupply from the world’s oil producers and a weaker U.S. dollar, said Brian LaRose, a technical analyst with United-ICAP.
A “significant catalyst” is needed to prompt buying, and LaRose said that has been absent. “Until we see some sort of technical evidence developing, then one has to be skeptical of picking a bottom,” he said.
Spot gold XAU= rose 1.3 percent while silver XAG= added 3.3 percent. Copper CMCU3 bounced from a 4-1/2 year low to gain 0.6 percent at $ 6,325 a ton.
(Additional reporting by Chuck Mikolajczak, Samantha Sunne, Karen Brettell and Sam Forgione; Editing by Dan Grebler, Christian Plumb, Meredith Mazzilli and Steve Orlofsky)