Wall Street ended lower overnight, as poor economic data and concerns about events in Iraq weighed on trade.
The Dow Jones closed 0.7 per cent lower at 16,734, and the S&P 500 suffered its sharpest fall in three weeks, ending the day down 0.7 per cent at 1,930.
The only index on global markets making any gains was the volatility index, or the market’s fear gauge – the VIX jumped 9 per cent overnight.
Markets are growing increasingly worried about the seizure of major cities in Iraq by jihadist fighters and the rising prospect of sectarian civil war, as Iraq is OPEC’s second-biggest oil producer.
Around a quarter of Iraq’s oil production comes from the north of the country, which is the centre of the fighting for now.
As a result oil prices are starting to rise, but not too sharply, as the bulk of oil produced in the north of the country is not exported and fighting in the region has only limited oil production since March.
West Texas crude oil hit $US107.10 a barrel, in the UK Brent crude rose 3 per cent to $US113.26.
On the economic front, official figures revealed US retail sales rose just 0.3 per cent in May, half of what economists were expecting.
The Labour Department revealed applications for unemployment benefits also rose 4,000 to a seasonally adjusted 317,000 last week, however that is still close to pre-recession lows.
Across the Atlantic, markets mostly ended flat with little news to inspire selling or buying – perhaps traders were catching some sleep before the start of the World Cup.
London’s FTSE 100 ended flat, so did the CAC, and the DAX eased slightly by 0.1 per cent to 9,938.
The Australian share market was set for a poor start to trade, at 7:20am (AEST) the SPI 200 was 0.6 per cent lower at 5,400.
The poor retail data sent the US dollar down, so the Australian dollar continued to climb and was worth 94.25 US cents.
On commodity markets, iron ore fell to $US91.50 a tonne, while spot gold benefitted from a shift to safer assets it rose $US12.46 to $US1,273.70 an ounce.