Global financial worries throw wrench into U.S. stock markets

Global financial worries throw wrench into U.S. stock markets

European stock markets recovered on Wednesday (May 30) from a sharp sell-off the day before that was triggered by the political turmoil in Italy.

"Italy failing to form a government, the markets were on edge and it happened to just crack and perhaps the reaction was a little bit out-sized", Aaron Clark, portfolio manager at Boston-based GW&K Investment Management, said by phone.

Japan's biggest private life insurance firm, Nippon Life, which holds some 4.8 trillion yen ($44.21 billion) worth of euro zone bonds, also said it had no plans for now to buy or sell its Italian debt holdings.

Elsewhere shares in Deutsche Bank recovered some of the previous session's heavy losses, climbing 2.8 percent higher following Thursday's drop of more than 7 percent in the after a report that the U.S. Federal Reserve past year designated the bank's U.S. operations to be in "troubled condition".

Analysts were also getting more cautious of the dollar´s recent move higher - the greenback hit a 6-1/2 month high against a basket of its rivals earlier this week - on trade war fears and rising concerns the USA economic momentum may soften.

The Wall Street Journal reported that the Fed previous year designated its USA operations to be in "troubled condition", one of the lowest designations employed by the central bank.

US crude oil fell 1.7 percent to $66.73 a barrel in NY.

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Shares in steel pipe maker Tenaris (TENR.MI) fell 3.2 percent, while steelmakers Thyssenkrupp (TKAG.DE) and Salzgitter (SZGG.DE) fell more than 1 percent. The Italian and Spanish stock markets were suffering the worst, with stock market drops in the 2.5 percent range.

Most Southeast Asian markets were closed for holidays. The dollar remained steady against the yen.

The eurozone annual inflation jumped to 1.9 percent in May, matching the European Central Bank's target inflation of "below, but close to 2 percent", according to a flash estimate by Eurostat, the statistical office of the European Union (EU) on Thursday.

The turmoil has also sent the yield spread between Italy and Germany's 10-year bonds to around a five-year high, reflecting investor concerns.

Adding to the selling pressure was a brewing crisis in Spain, where Prime Minister Mariano Rajoy faces a no-confidence vote after his party was found guilty of benefiting from illegal funds in a massive graft trial. Silver lost 1 percent to $16.37 an ounce. The yield on the 10-year Treasury fell to 2.78 percent, its lowest since early April, from 2.93 percent.

ENERGY: Benchmark U.S. crude fell 57 cents to $67.31 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, added 78 cents to $76.08 per barrel in London. Oil prices have slumped in the last week following reports that OPEC countries and Russian Federation could start pumping more oil soon.

Trader Peter Tuchman works on the floor of the New York Stock Exchange, Tuesday, May 29, 2018. Hong Kong's Hang Seng Index dropped 1.55 percent by 3:20 p.m. HK/SIN, with the property sector falling 1.9 percent.

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