Spanish Protests Spook Markets

A laundry list of problems in Spain finally tipped sentiment on Tuesday, sending US stocks to their worst day in two months. The yen was the top performer while the Australian dollar lagged. The Asia-Pacific session is light on data.Monday's Premium Insights are mostly in progress and nearing their targets. 3 charts were also added to EURUSD and GBPUSD.

US economic data was roundly better than expected but it wasnt enough to calm fears about Spain and the periphery as massive protests erupted in Madrid.

US consumer confidence improved nearly 10 points to 70.3, easily beating the 63.1 expected. The Richmond Fed also rebounded to the highest since April at +4, compared to -5 expected.

Risk trades peaked shortly after the releases with the euro at 1.2970 and AUD/USD at 1.0460. The lack of follow-thru and images of protesters storming Spanish parliament ahead of Thursdays austerity budget sparked a reversal.

In addition, Spanish region Catalonia called early elections that are seen as a referendum on independence and reports suggested Andalusia will ask for a bailout. Spanish budget figures were weak, with the deficit through August topping the full-year estimate.

Construction equipment-maker Caterpillar also dampened enthusiasm, cutting its profit forecast. In Greece, the local media reported aid will not be distributed until debt is restructured again. Finally, the WSJ reported that a Russian bailout for Cyprus may have fallen apart.

WTI crude oil fell as low as $91.07 after the Feds Plosser said a new stimulus program probably wont spur growth.

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