BLBG:Yen Reaches 2 1/2-Yea Low as Pound Drops, Metals Gain
The yen reached a 2 1/2-year low against the dollar and headed for its 10th weekly loss after a government advisor said the currency can keep weakening without hurting the economy, while the pound slid for a sixth day after U.K. retail sales declined. Metals rose after China’s growth accelerated and European stocks swung between gains and losses.
Japan’s currency gained less than 0.1 percent to 89.81 per dollar at 7 a.m. in New York after touching 90.21, the weakest level since June 23, 2010. The pound fell 0.3 percent versus the dollar. Lead jumped 1.6 percent, zinc climbed 1.5 percent and a gauge of Chinese stocks jumped to a 17-month high. The Stoxx Europe 600 Index (SXXP) gained 0.1 percent and Standard & Poor’s 500 Index futures added less than 0.1 percent. Japan’s Topix Index jumped 2.4 percent, capping a 10th straight weekly advance, on prospects the central bank will extend asset purchases.
The yen needs to return to a rate that helps the economy and “100 yen is a good level,” Koichi Hamada, who is advising Japan’s prime minister in choosing a new central bank governor. The Bank of Japan may decide to conduct open-ended asset buying to stoke inflation at a meeting starting Jan. 21. China’s gross domestic product expanded 7.9 percent in the fourth quarter from a year earlier, up from a three-year low of 7.4 percent in the previous period, National Bureau of Statistics data showed.
“The market has in its head that there is going to be a material change in BOJ policy,” said Jeremy Hale, head of macro strategy at Citigroup Inc. in London. “The BOJ is expected to announce further easing next week. In the short-term I think the yen can weaken further as the BOJ announces further stimulus. The market is expecting a sea-change in policy when the new governor comes in and that will be the big test.”
Yen Slide
Japan’s currency has tumbled 13 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, on speculation the Bank of Japan will heed Abe’s calls for greater stimulus to boost the economy, which may debase the currency.
The central bank will adopt the government’s desired 2 percent inflation target at its Jan. 21-22, according to 20 of 22 economists surveyed by Bloomberg News. All 22 expect the BOJ to add to its asset-purchase program, its main policy tool amid near-zero interest rates, with the median forecast for a 10 trillion yen increase.
Three shares rose for every two that declined in the Stoxx 600, with media and basic-resource stocks leading gains. Telenet Group Holding NV slid 3.1 percent, the most since August, as Liberty Global Inc. said it won’t reopen its bid for the Belgian cable-TV company.
GE Gains
The S&P 500 advanced 0.6 percent to extend a five-year high yesterday. Intel (INTC) lost 5.3 percent in German trading after the world’s largest semiconductor maker reported a second straight quarter of declining sales. AT&T Inc. fell 1.6 percent after recording a $10 billion fourth-quarter charge for its pension plan and said smartphone subsidies put pressure on profit. Capital One Financial Corp. plunged 7.4 percent as the lender reported quarterly profit that missed estimates.
General Electric Co. rose 2 percent in pre-market trading. Adjusted income from continuing operations grew 13 percent to $4.67 billion, or 44 cents a share, in the fourth quarter. That topped an average estimate of 43 cents a share in a Bloomberg survey of 13 analysts.
Morgan Stanley and Schlumberger Ltd. are also among companies in the S&P 500 due to report today. Of the 57 index members that have posted quarterly earnings since Jan. 8, 70 percent exceeded analysts’ profit estimates, according to data compiled by Bloomberg.
Interbank Borrowing
An indicator of future interbank borrowing costs climbed for a second day on speculation financial institutions will start repaying European Central Bank loans later this month and that rules governing collateral for borrowing will be tightened. The implied rate on Euribor futures contracts expiring in December rose as much as eight basis points to 0.54 percent, the highest since July 10.
Zinc and lead rallied and aluminum jumped 0.8 percent after the GDP report from China, the world’s largest buyer of industrial metals. Palladium rose as much as 1 percent to $732.50 an ounce, the highest since Sept. 19. Palladium’s biggest use is in car catalysts to reduce harmful exhausts.
Crude in New York fell 0.2 percent to $95.29 a barrel.
Silver rose as much as 0.6 percent to $31.9288 an ounce, a one-month high, after the U.S. Mint suspended 2013 American Eagle silver coin sales until inventory is replenished. More investors are attracted to silver because of gold’s “lackluster” gain this year, Deutsche Bank AG said in a report today. Silver is up 4.8 percent while gold has climbed less than 1 percent. Assets in iShares Silver Trust, the biggest exchange- traded fund for the metal, climbed the most in five years, according to data on the iShares website yesterday.
The MSCI Emerging Markets Index (MXEF) rose 0.7 percent. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong added 2.1 percent to the highest level since August 2011. Russia’s Micex Index jumped 01 percent. Energy shares led India’s Sensex to a two-year high as the government allowed oil companies to raise diesel prices, with 78 percent more shares traded than the 30-day average volume.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
