US equity markets broke a five-day rally, closing the session lower on the back of renewed caution surrounding the European debt crisis heading into the end of the year. A record expansion in the ECB’s balance sheet, spurred by additional lending to financial institutions last week, sent all equity sectors lower, with economically sensitive industries such as Materials, Energy and Industrials leading the sell-off. Low volumes continue to magnify intra day volatility and increase the effects seen from investor’s nerves around important technical points that are reached after last weeks rally.
Materials and energy shares were impacted the most by the weakness in underlying commodities pricing with copper down 1.28 percent, silver down 5.5 percent and Nickel down 2.8 percent. Oil futures registered their first loss over a week. Freeport McMoran closed down 4 percent, Mosaic down 3.9 percent and Alcoa down 3.07 percent. In the energy space, Exxon fell 1.29 percent, Chevron fell 1.87 percent and Apache fell 2.47 percent.
Financials were also under pressure as debt concerns returned. Bank of America closed down 3.56 percent after press reports it could put more assets up for sale to raise capital ratios.
Asia opened lower but managed to recoup some of its early losses. Japan’s Nikkei is down 0.3 percent after Yen rose to a 10-year high against the Euro impacting exporters. Elsewhere, Tepco fell 2.1 percent on the back of nationalisation noises. In Sydney, Lynas Corp, a rare earths developer, slid 5.3 percent after the Chinese government said on Dec. 27 it will keep 2012 export quotas of rare earth virtually unchanged.
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