Markets across Asia plunged on rumours emerging last night that a hedge fund was liquidating large positions in commodities, as well as the FOMC minutes that suggested the US Fed could slow its QE program.
The Aussie market tanked - "This was always meant to happen, but the market was expected to correct over a few days, not in one big dump" said a senior retail dealer who added, "The market can now stabilise and get on with it".
*Reuters reported Credit Agricole forex director Yuji Saito in Tokyo who said, "We all heard the hedge fund rumour and price action appeared to back such a rumour, but nobody has seen hard news,"
"The price action also happened at the same time as the Fed's minutes which suggested the risk of an exit (from quantitative easing), so it's natural that money which had fled the dollar was returning, such as from gold. I think the fallout from the Fed's minutes will continue this session, prompting some money to head towards the dollar," Saito said.
More than two stocks fell for each that climbed on the MSCI's Asian gauge.