BLBG:Yen Rallies From 3-Year Low as Stocks Fall; Kospi Slides
The yen strengthened from an almost three-year low against the dollar, while European stocks fell for a second day. South Korean equities dropped the most in a week after North Korea conducted a third nuclear test.
The yen appreciated 0.2 percent to 94.18 per dollar at 10:05 a.m. in London after yesterday trading at its weakest level since May 2010. The pound sank 0.5 percent to $1.5578 as a report showed U.K. inflation last month held at the highest since May. The Stoxx Europe 600 Index declined 0.2 percent and Standard & Poor’s 500 Index futures lost 0.2 percent. South Korea’s Kospi Index closed 0.3 percent lower, erasing a 0.4 percent advance. Corn slumped for an eighth day, the longest losing streak since March 2010.
U.S. Treasury Undersecretary Lael Brainard said she supports Japan’s effort to end deflation after the yen slid for four straight months through the end of January. Finance ministers from the Group of 20 nations are due to meet this week in Moscow. The underground test “of a smaller and light A-bomb” was successful, the official Korean Central News Agency said in a statement.
“The yen is to and fro at the moment depending on whether the market senses there will be currency war-type references or the issue will be left alone,” said Neil Jones, the head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “There seems to be an investor sense now that maybe there will actually be some talk. There is a slight amount of risk aversion creeping in European markets.”
The Group-of-Seven nations today reaffirmed their commitment to market-determined exchange rates, according to a statement issued by finance chief and central bankers in the G- 20 meeting. The G-7 won’t target exchange rates, they said.
Yen Gains
The yen advanced against 14 of its 16 major peers, climbing 0.3 percent versus the euro. Japan’s currency slumped against the dollar yesterday as Haruhiko Kuroda, a possible contender for Bank of Japan governor, said additional monetary easing could be justified this year.
The Stoxx 600’s decline extended the losses from this year’s high on Jan. 29 to 1.7 percent. The volume of shares changing hands in Stoxx 600 companies was 13 percent lower than the 30-day average, according to data compiled by Bloomberg.
Finmeccanica SpA, Italy’s biggest defense company, plunged 8.3 percent, the biggest drop in 14 months, as two people familiar with the matter said Chief Executive Officer Giuseppe Orsi was arrested amid a probe of possible bribes paid to win the sale of 12 helicopters to India. The cost of insuring against default by the Milan-based company jumped 29.5 basis points, or 8.5 percent, to 377 basis points.
Michelin Forecast
Michelin & Cie. slid 3.7 percent as Europe’s largest tiremaker said sales and earnings probably won’t grow this year. L’Oreal SA, the world’s largest cosmetics maker, rallied 4.5 percent as earnings increased. Barclays Plc climbed 4.4 percent as the U.K. bank said it will eliminate 3,700 jobs to reduce costs after posting its first full-year loss in more than two decades.
Coca-Cola Co. and McGraw-Hill Cos. are among 13 companies in the S&P 500 due to report results today. Some 74 percent of index members have topped analysts’ profit estimates so far this quarter, according to data compiled by Bloomberg.
The MSCI Emerging Markets Index slipped 0.1 percent, leaving it 0.3 percent higher this year. That compares with a 5.1 percent gain in the MSCI World Index of developed nations. Sixty percent of companies in the MSCI gauge for emerging markets have reported quarterly profit that missed estimates, twice the rate for developed nations, Bloomberg data show.
Poland’s WIG20 Index lost 0.8 percent as Telekomunikacja Polska SA, the nation’s largest phone company, tumbled 26 percent after cutting its dividend proposal for the second time in four months. India’s Sensex Index jumped 0.5 percent, snapping an eight-day rout. Indonesia’s benchmark gauge jumped 1 percent.
Markets in China, Taiwan, Malaysia and Vietnam are shut for Lunar New Year.
Default Risk
The cost of insuring against losses on German government debt rose to the highest since October, with credit-default swaps linked to the nation’s bonds adding 1.3 basis points, or 3 percent, to 42.6 basis points.
Corn dropped 0.8 percent on forecasts for increased production. Oil fell 0.3 percent to $96.70 per barrel in New York after rallying the most in a month yesterday. Zinc slumped 0.9 percent.
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: Justin Carrigan at jcarrigan@bloomberg.net
