BLBG:Stocks, Euro, Commodities Decline on Greek Crisis Concern
Stocks tumbled and commodities fell as talks to form a Greek government failed. Italy’s 10-year yield topped 6 percent for the first time since January, Spain’s default risk rose to a record and the dollar strengthened.
The MSCI All-Country World Index (MXWD) lost 0.9 percent at 10:40 a.m. in London, and Standard & Poor’s 500 Index futures fell 0.3 percent. The 10-year Italian bond yield rose as much as 14 basis points and the cost of insuring Spanish debt jumped as much as seven basis points to 553. The S&P GSCI gauge of 24 raw materials dropped to the lowest in almost five months. The Dollar Index rose for the 13th day as German bunds and U.K. gilts advanced.
Greece will hold new elections that may threaten spending cuts required to secure 240 billion euros ($306 billion) in bailouts. German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur Greece’s economy as long as voters committed to austerity. U.S. housing starts and industrial output probably increased, economists said before reports today after U.K. data showed unemployment unexpectedly fell in April.
“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.
Missing Estimate
The Stoxx Europe 600 Index (SXXP) slid 1.1 percent to the lowest level since December. The gauge has retreated 11 percent from this year’s high on March 16. A.P. Moeller-Maersk A/S tumbled 6.4 percent after saying its container line will at best break even this year, falling short of analyst estimates for a profit. Banco Espirito Santo SA, Portugal’s biggest publicly traded lender by market value, sank 7.2 percent as first-quarter profit dropped 84 percent.
The drop in S&P 500 futures indicated the U.S. gauge will extend declines that have drive it to the lowest level since February. J.C. Penney Co. (JCP) plunged 13 percent in German trading after the department-store chain reported a first-quarter loss and sales that fell more than analysts projected.
Builders in the U.S. probably broke ground on more houses in April, rebounding from a five-month low and indicating the industry is stabilizing, economists said before a report due at 8:30 a.m. in Washington today. Industrial production rose in April, a separate Federal Reserve release is projected to show. The Fed will also release minutes from its latest meeting.
Dollar Winning Streak
The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, advanced 0.2 percent, taking its gains since April 27 to 3.5 percent. The pound slipped 0.6 percent to trade below $1.60 for a second day, while the Swedish krona weakened versus the dollar for the 13th straight day, its longest run of declines since at least 1971.
The Italian 10-year bond yield jumped to as high as 6.01 percent, and credit-default swaps on government debt climbed 13 to 515, the highest since January. The Spanish 10-year yield rose 16 basis points to 6.51 percent. The yield on the February 2023 Greek bond surged as much as 97 basis points to 30.37 percent.
The Markit iTraxx Europe Index of default swaps on 125 investment-grade companies rose for a seventh day, the longest streak since August. The measure was up six basis points at a four-month high of 180.
France’s five-year yield fell two basis points after the government sold 3.65 billion euros of 2017 notes. Germany sold 4.107 billion euros of 10-year bonds at a record low average yield of 1.47 percent.
Treasuries Gain
The yield on the 10-year Treasury note slipped about 1 basis point to 1.76 percent, within 10 basis points of a record low 1.67 percent reached on Sept. 23.
The GSCI gauge of commodities dropped 1.3 percent bringing this year’s decline to 2.7 percent. Gold declined 0.7 percent to $1,533.45 an ounce. Copper slipped 1.4 percent to $7,656.75 a metric ton. Palladium dropped as much as 1.1 percent to the lowest since Nov. 30. Oil in New York declined 1.9 percent to $92.24 a barrel.
The MSCI Emerging Markets Index fell 2.5 percent, the most since Nov. 23 on a closing basis. The Hang Seng China Enterprises Index of mainland stocks sank 3.5 percent and South Korea’s Kospi index slipped 3.1 percent. The Shanghai Composite Index fell 1.2 percent, and benchmark gauges in Russia, India, Poland, Hungary and the Czech Republic lost more than 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Sungwoo Park in Seoul at spark47@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
