Euro jitters spur local sell-off

11.15 AEDT, Monday 18 March 2013

Euro jitters spur local sell-off
By William Leys (Sales Trader, CMC Markets)

The Paddy's Day hangover has just gotten worse for investors, with the All Ords taking a battering in morning trade amid fresh Euro zone concerns.

Cyprus' extraordinary proposal of a levy on bank deposits, seen as the price of securing a Euro bailout package, has alarmed markets globally. There is a genuine concern that such a measure will prompt a run on the banks within Cyprus, and set a dangerous precedent for the periphery countries within the single currency zone.

We're seeing this fear being played out locally now, and it represents quite a dramatic shift back to 'risk-off' sentiment, especially given the strong performance of our index on Friday.

Losses are across the board, with health, consumer staples and IT sectors among the worst. The AUD is also under pressure, losing around half a cent against the USD since open this morning.

Attention is likely to remain on the Euro zone in the short term. The ECB's reaction to this latest situation may determine whether this is a minor flush of the equity market, or perhaps part of a bigger correction.

http://www.cmcmarkets.com/

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