BLBG:Asian Stocks Drop As Euro Slides To A Two-Year Low
Asian stocks dropped and the euro fell to a two-year low after Spanish borrowing costs rose and China damped speculation of large-scale economic stimulus. European equity futures fell before bond auctions in Italy.
The MSCI Asia Pacific Index lost 0.8 percent as of 7:07 a.m. in London, led by shares of resources and energy companies. Futures on the Euro Stoxx 50 Index fell 0.7 percent, while those on the Standard & Poor’s Index declined 0.6 percent. The euro weakened 0.3 percent to $1.2466 and the Australian dollar retreated 0.5 percent. Crude oil slid 0.5 percent to $90.30 a barrel in New York and copper dropped for a second day in London.
Italy will seek to sell up to 6.25 billion euros ($7.8 billion) of bonds today after Spain’s 10-year yield rose to the highest level since November. A report today is expected to show economic confidence in the euro zone fell to the lowest level since November 2009 amid concern the region’s debt crisis will worsen. China has no plans to introduce stimulus measures on the scale seen during the global financial crisis, the official Xinhua News Agency reported.
“Chinese authorities do see downside risks to growth this year,” said Dwyfor Evans, a Hong-Kong based strategist at State Street Global Markets, part of State Street Corp., which has $1.9 trillion under management. “They will continue addressing the slowdown but it’s hard to assess if it will be enough.”
The MSCI Asia Pacific Index is headed for a 10 percent decline this month, which would be the biggest loss since October 2008, amid signs of a deepening slowdown in China and as European leaders pressure Greece to meet bailout terms and stay in the euro. Greece will hold an election next month that may determine its course of action.
Europe’s Woes
The euro has lost 5.8 percent this month, headed for its largest monthly drop since September, and touched $1.2457 today, the weakest level since July 1, 2010. Spain backtracked yesterday on a plan to use government debt instead of cash to bail out Bankia, as Prime Minister Mariano Rajoy struggles to shore up the nation’s lenders without overburdening public finances.
“It’s all about what happens with Spain and their banks, and what could be the scenario in terms of how much money they ask for,” said Mary Nicola, a currency strategist at BNP Paribas SA in New York. “But there’s still that Greek shadow.”
The Hang Seng Index dropped 1.8 percent today in Hong Kong, leading declines among major Asia equity benchmarks. CNOOC Ltd., China’s biggest offshore oil producer, slid 1.9 percent. The price of crude has tumbled 14 percent this month in New York, the biggest decline since May 2010.
Commodities Drop
The S&P GSCI gauge of 24 commodities decreased 0.4 percent, led by gas oil, zinc and copper. Spot gold lost as much as 0.6 percent to $1,545.88 an ounce, set for a fourth monthly decline. That would be the longest losing streak since 1999.
The yield on benchmark 10-year Treasuries slid three basis points, or 0.03 percentage point, to 1.72 percent. The U.S. Labor Department is scheduled to release its monthly employment report later this week. U.S. payrolls probably climbed by 150,000 workers this month after a 115,000 gain in April, according to the median forecast of economists surveyed by Bloomberg News before the June 1 report.
A report from the National Association of Realtors today will probably show pending home sales in the U.S. were unchanged in April after rising in the previous three months, a Bloomberg News survey of economists showed. The figure is a leading indicator of conditions in the real estate market because it tracks contract signings.
The cost of insuring bonds from default rose in Asia, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced one basis point to 193 basis points, according to Credit Agricole SA. The gauge is set for an increase of 28 basis points since April 30, the biggest monthly gain since September, according to data provider CMA.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
