BLBG:Stocks, Euro, Commodities Decline on Greek Crisis Concern
Stocks fell, the euro dropped to a four-month low and commodities slumped as talks to form a new Greek government failed and before data that may show U.K. unemployment rose to match a 16-year high.
The MSCI All-Country World Index (MXWD) lost 0.9 percent by 8:06 a.m. in London, the Stoxx Europe 600 Index slid 0.8 percent and Standard & Poor’s 500 Index futures fell 0.3 percent. The euro weakened 0.3 percent to $1.2692. The S&P GSCI Index of 24 raw materials dropped 1.2 percent to its lowest since December, with gold tumbling into a bear market and oil dropping 2 percent to a six-month low in New York.
Greece will hold new elections after President Karolos Papoulias failed to form a ruling coalition, threatening spending cuts required to secure 240 billion euros ($306 billion) in bailouts. Japan’s machinery orders fell 2.8 percent in March and Australian consumer confidence stagnated near the lowest level this year.
“As the pressure builds in Europe, you need to see another mini crisis before policy makers will step in, and we’re not there yet,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “Markets and economies in Asia are at the mercy of the export story.”
The euro sank to as low as $1.2681, the weakest since Jan. 17, as the political impasse in Greece deepens speculation the country will have to leave the 17-nation currency bloc. Greek leaders will seek agreement today on new elections as early as June 10. The Dollar Index (DXY) rose 0.4 percent, extending its longest stretch of daily advances on record, before the Federal Reserve releases minutes of its April meeting. The South Korean won dropped 1 percent to 1,165.55 per dollar, while Malaysia’s ringgit lost 1.2 percent to 3.1184.
U.K. Jobless
The Standard & Poor’s GSCI index has fallen 2.7 percent so far this year on concern Europe’s debt crisis and a slowdown in China will dampen demand for raw materials. Gold fell 1 percent. Copper in London declined 1.7 percent, reaching a four-month low. Crude oil futures in New York dropped as much as 2.3 percent to $91.82 a barrel, the lowest intraday price since Nov. 3.
The U.K. jobless rate probably increased to 8.4 percent, according to the median forecast in a Bloomberg News survey before a government report at 9:30 a.m. in London.
China Slowdown
The MSCI Asia Pacific Index (MXAP) declined 2.7 percent, heading for its biggest loss since Nov. 10. Almost eight stocks fell for each that rose in the Asian benchmark. Raw-material producers and technology companies led declines as all 10 industries in the gauge slid. The Nikkei (NKY) 225 Stock Average slipped 1.1 percent, while Australia’s S&P/ASX 200 Index lost 2.4 percent and South Korea’s Kospi index sank 3.1 percent.
Toll Holdings Ltd. (TOL), Australia’s largest trucking company, tumbled 15 percent after forecasting full-year profit below analyst estimates. BHP Billiton Ltd. (BHP), the world’s biggest mining company, declined 4.1 percent as metal prices fell. Sanrio Co. (8136), which licenses the Hello Kitty brand, lost 9.5 percent after its earnings projection trailed forecasts.
Hong Kong’s Hang Seng Index (HSI) fell 3.3 percent and the Shanghai Composite Index slid 1.2 percent after reports over the past week showed slowing Chinese growth, with exports, production and new loans missing analysts’ forecasts. Combined net lending for the nation’s four biggest banks was almost zero in first two weeks of this month, the Shanghai Securities News reported, citing unidentified person familiar with the matter.
Japanese Bonds
Concerns over the Greek crisis sent Japanese government bonds higher as investors sought refuge in safe assets amid falling shares. The yield on the 10-year security slid 2 1/2 basis points to 0.825 percent as of 3:12 p.m. in Tokyo, according to data compiled by Bloomberg. That’s the least since October 2010 when rates reached 0.82 percent, a level unseen since records were set in 2003.
The Markit iTraxx Japan index increased four basis points to 212, according to Deutsche Bank AG prices. The cost of insuring Asia-Pacific bonds from default increased, according to traders of credit-default swaps. Japan’s economic growth probably peaked in the first quarter, a Bloomberg News survey showed ahead of a report tomorrow. Analysts forecast the pace of expansion will halve by year-end as the boost from earthquake reconstruction fades.
To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
