90 seconds at 9am: Greece slashed to junk; Dow slumps; NZ$ down; Australia shelves its ETS

Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including news that European and US financial markets were in turmoil overnight after Standard and Poor's downgraded Greece's sovereign credit rating to a BB+ junk rating. Standard and Poor's expressed fears the current rescue package may not be enough to prevent a contagion breaking out across Southern Europe that eventually breaks up the euro. Standard and Poor's also downgraded Portugal by two notches.

"It's contagion from the Greece crisis which has spiraled out of control," said William Sullivan at JVB Financial Group in Florida. "It's like coconuts falling from the tree. There's a flight from sovereign debt issuers that have suspect national finances." Sullivan said there was "outright panic" among investors who feared they would lose some of their principal if Greece restructured or defaulted on its 300 billion euro debt.

The Dow closed down 1.9% or more than 200 points to be under 11,000 on the European problems and as Goldman Sachs executives were grilled in the US Senate, increasing the risks of financial reforms that would hurt the banks. European stock markets slumped and the euro fell further Greek bond yields jumped. The 2 year Greek government bond hit 19%. There is real fear now that the Greek situation will spin out of control, particularly given the Germans are still prevaricating over whether to support a deeply unpopular rescue package. German regional elections on May 9 are seen as crucial. The New Zealand dollar was firm against the euro at 54 cents, but fell sharply against the US dollar to 71.2 USc as investors avoided risky currencies. Meanwhile, Australia has shelved its emissions trading scheme, leaving New Zealand as the only country in this part of the world committed to introducing an Emissions Trading Scheme, despite the failure of the Copenhagen talks.