BLBG:U.S. Stock Futures Drop as Yen Slips Amid Budget Deadlock
U.S. stock futures declined amid growing speculation American lawmakers will miss a year-end budget deadline. The yen weakened as Japan’s incoming pro- stimulus prime minister said he may change rules governing the central bank, while gold rose.
Standard & Poor’s 500 Index futures dropped 0.5 percent as of 10 a.m. in London. The Stoxx Europe 600 Index slipped less than 0.1 percent. Markets in most European nations were closed today for Christmas Eve. The yen fell 0.2 percent against the dollar, extending the longest streak of weekly declines in nine months. Gold climbed 0.4 percent.
Time is running out for U.S. lawmakers and President Barack Obama to agree on a budget deal by year-end to avoid triggering more than $600 billion in tax increases and spending cuts, Senator Joseph Lieberman said. Japan’s Shinzo Abe said he will consider changing laws governing the central bank if it fails to revise its inflation target up to 2 percent next month.
“Equities are trading moderately lower in early trading as hopes have receded substantially during the past week that U.S. politicians will be able to reach a compromise to avert the U.S. going over the fiscal cliff in the few remaining days before the end of the year,” Markus Huber, head of German sales trading at ETX Capital in London, said in an e-mailed note to investors. “Trading volume is expected to be on the low side today.”
Budget Stalemate
The drop in S&P 500 futures indicated the equity benchmark will extend its slide at the end of last week. The S&P 500 Index had its biggest decline in more than a month on Dec. 21 after U.S. House Speaker John Boehner failed to garner support from his caucus for “Plan B,” which would have extended tax cuts on incomes below $1 million.. The gauge has rallied 14 percent this year, its largest annual gain since 2009.
“For the first time I feel it’s more likely that we will go off the cliff,” Lieberman, a retiring Connecticut independent, said on CNN’s “State of the Union” program. Lawmakers plan to return to Washington Dec. 27 to continue their negotiations.
Abe said on Fuji Television yesterday that he will consider revising the central bank law if the Bank of Japan fails to increase its inflation target to 2 percent from 1 percent at its January meeting.
The yen fell 0.2 percent to 84.43 per dollar. It depreciated to 84.62 on Dec. 19, the weakest since April 12, 2011. The Japanese currency slid 0.5 percent to 111.60 per euro. The dollar dropped 0.3 percent to $1.3221 per euro.
Yen Weakens
The yen has tumbled 13 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has weakened 3 percent and the euro has dropped 1 percent.
U.K. government bonds fell after a report showed British house prices fell for a sixth month in December. Home prices in England and Wales slipped 0.1 percent, the same as in November, Hometrack Ltd. said in an e-mailed statement today. The yield on 10-year gilts increased one basis point to 1.89 percent.
European stocks were little changed, with the number of shares changing hands in companies listed on the Stoxx 600 74 percent lower than the average of the past 30 days. BP Plc added 0.4 percent after a New Orleans judge gave final approval to a settlement between the oil company and lawyers representing victims of the 2010 Gulf of Mexico oil spill. The agreement doesn’t cover suits brought by the U.S. government and the states of Alabama and Louisiana.
The Stoxx 600 has surged 15 percent this year, rebounding from last year’s 11 percent decline. Hong Kong’s stock market traded for half a day, while Japan was closed.
Gold Gains
Gold rose to $1,663.80 an ounce, rebounding from its biggest weekly drop in six months. Natural gas declined 1 percent and nickel fell 0.5 percent. The S&P GSCI gauge of 24 commodities fell for a third day, bringing the drop this year to 1 percent, heading for the first annual decline since 2008.
Brent crude oil futures retreated 38 cents a barrel to $108.59 on London’s ICE Futures Europe exchange, paring its gain this year to 1 percent.
The MSCI Emerging Markets Index (MXEF) rose 0.1 percent, the first gain in three days, led by information technology companies. The gauge has climbed 14 percent this year.
The Romanian leu strengthened 0.5 percent versus the euro, heading for the strongest close since May and leading gains among emerging-market currencies tracked by Bloomberg. Romanian Prime Minister Victor Ponta’s government won parliamentary approval on Dec. 21, allowing the new Cabinet to push through a 2013 budget and start talks for a new international precautionary credit.
The South African rand advanced 0.2 percent against the dollar, headed for its best month since June, as exporters repatriated foreign-currency earnings ahead of the two-day Christmas holiday.
To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
