BLBG:Stocks Fall With Euro As Economies Slow; Commodities Drop
Stocks (MXWD) fell, with the global benchmark index sliding for a second day, the euro weakened and commodities dropped on evidence the global economic slowdown is worse than anticipated. Spanish and Italian bonds declined.
The MSCI All-Country World Index lost 0.5 percent at 10 a.m. in London. Standard & Poor’s 500 Index futures sank 0.6 percent. The euro depreciated 0.4 percent to $1.2515 and the Australian dollar declined against 14 of its 16 most-traded peers. Italy’s two-year note yield rose for the first time in nine days and Spain’s 10-year bond snapped a two-day gain. Copper slid 0.7 percent and oil dropped 0.5 percent.
Euro-area services and manufacturing contracted more than initially estimated in August, London-based Markit Economics said today, while reports showed Australia’s economic growth was slower than forecast and Norway’s purchasing managers index unexpectedly fell. The European Central Bank’s Governing Council will decide tomorrow on a bond-buying proposal President Mario Draghi says is necessary to ensure the euro’s survival.
“The global backdrop remains very challenging,” said Sue Trinh, a senior currency strategist in Hong Kong at Royal Bank of Canada. “Expectations for the ECB to deliver details on the bond-intervention program specific enough to satisfy the market are likely to be disappointed.”
The Stoxx Europe 600 Index (SXXP) fell 0.3 percent as two shares declined for every one that gained. BP Plc, the owner of the Macondo well that caused the worst U.S. oil spill, lost 3.8 percent after the Department of Justice reiterated it will pursue charges of gross negligence. BP engaged in “gross negligence and wilful misconduct,” Reuters reported the U.S. as saying in a court filing from Aug. 31.
Facebook Gains
The decline in S&P 500 futures indicated the gauge will extend yesterday’s 0.1 percent drop. Facebook Inc. (FB) advanced 2 percent in German trading as Chief Executive Officer Mark Zuckerberg said he won’t start selling his holdings in the social-networking company for at least a year.
The euro weakened 0.4 percent versus the yen, with the so- called Aussie dollar dropping 0.6 percent against Japan’s currency and 0.5 percent versus the greenback.
Norway Manufacturing
Norway’s krone slid against all 16 major counterparts after a report showed Norwegian manufacturing unexpectedly contracted for a third straight month in August, adding to signs that the debt crisis is hurting exports in western Europe’s biggest oil producer.
The yield on Germany’s five-year note fell three basis points, with Italy’s 10-year bond rate climbing six basis points. The 10-year U.S. Treasury note yield dropped two basis points to 1.56 percent.
The cost of insuring against default on sovereign debt rose for the first time in four days, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing five basis points to 227, the biggest increase in almost two weeks.
The S&P GSCI gauge of 24 commodities slipped 0.4 percent. Aluminum, zinc and lead fell 0.5 percent. Wheat slipped for a fourth day. Silver futures retreated 0.8 percent after rallying 6.5 percent in two days.
The MSCI Emerging Markets Index (MXEF) fell 1.1 percent, headed for its lowest close since July 26. South Korea’s Kospi Index slid 1.7 percent as U.S. sales by Hyundai Motor Co. and Kia Motors Corp. missed some analysts’ estimates. The Hang Seng China Enterprises Index of mainland companies dropped 2 percent on a report China’s industrial output may slow. Russia’s Micex Index and India’s Sensex slipped at least 0.7 percent.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
