BLBG:Stocks Fall With Oil on Economy as Japan Bonds Climb
Stocks and U.S.-equity index futures fell and oil dropped for a third day on concern changes in China’s government policy may slow growth and hurt the global recovery. Japan’s five-year note yield slid to a record.
The MSCI All-Country World Index (MXWD) lost 0.2 percent at 6:45 a.m. in New York and Standard & Poor’s 500 Index futures retreated 0.4 percent. The Shanghai Composite Index tumbled the most since August 2011. Oil fell to within 9 cents of $90 a barrel and aluminium dropped for an 11th day. Japan’s five-year rate declined two basis points to 0.095 percent. Italy’s 10-year yield rose three basis points to 4.82 percent after climbing as high as 4.89 percent. The euro weakened 0.2 percent to $1.2999 and Australia’s dollar fell to an eight-month low.
European finance ministers prepared to meet in Brussels today to discuss issues including a bailout for Cyprus, as a top aide to Italy’s Democratic Party leader Pier Luigi Bersani said the country may need to hold another election this year. Data yesterday showed China’s service industries grew last month at the slowest pace since September and the cabinet last week tightened mortgage rules to cool the property market as parliament gathered for an annual meeting.
“It seems that equities have run a bit too fast relative to the reality of a still subdued, and in some places, vulnerable recovery,” said Witold Bahrke, who helps oversee $55 billion of assets as senior strategist at PFA Pension A/S in Copenhagen. “Together with increasing political noise, from Europe primarily, this doesn’t bode too well for today’s market session.”
HSBC Tumbles
The Stoxx Europe 600 Index fell for a second day, losing 0.3 percent and paring this year’s rally to 3 percent. Commodity producers posted the biggest decline among 19 industry groups in the benchmark index, sliding 2.3 percent.
HSBC Holdings Plc retreated 2.7 percent as Europe’s largest bank said profit fell 5.6 percent in 2012 after taking a $5.2 billion charge for revaluing its own debt. Debenhams Plc (DEB) plunged 11 percent, the most since March 2009, after predicting that pretax profit will drop in the first half of the year because of snow in January.
Repsol SA added 2.1 percent as Spain’s largest oil producer sold a 5.04 percent stake to Temasek Holdings Pte, Singapore’s state-owned investment company. The oil producer had said it would consider selling shares after Argentina’s government seized its YPF business last April.
The cost of insuring against default on corporate debt increased for a second day, with the Markit iTraxx Europe index of credit-default swaps linked to 125 investment-grade companies climbing 1.5 basis points to 119.5.
Italian Bonds
The drop in Italian 10-year bonds sent yields toward the highest in more than three months. German bonds were little changed, with the 10-year yield at 1.42 percent after it fell to 1.39 percent, the lowest since Jan. 2.
The euro weakened slipped 0.3 percent versus the yen. The Aussie dollar tumbled as much as 0.9 percent to $1.0115, the lowest level since July. Norway’s krone strengthened more than 0.5 percent against all 16 of its major counterparts.
The gain in Japanese bonds came after Haruhiko Kuroda, the nominee to be Bank of Japan governor, said he would do whatever is needed to end 15 years of deflation. The yield on the benchmark 10-year note fell four basis points to 0.61 percent.
Oil Slides
The S&P GSCI fell for a fifth day, the longest slump since Dec. 10. Crude oil declined for a third day, dropping 0.3 percent to $90.41 a barrel. Aluminum retreated for an 11th consecutive day, the longest run of losses since June. China is the biggest buyer of energy and industrial metals. U.S. natural gas and wheat sank 0.5 percent. U.K. natural gas for delivery today jumped as much as 52 percent after exports from Norway into Europe’s biggest market decreased to a four-month low.
The MSCI Emerging Markets Index slid 1 percent. The Shanghai Composite Index slipped 3.7 percent, led by property developers after China’s Cabinet on March 1 called for higher downpayments and interest rates for second-home mortgages in some cities. The non-manufacturing Purchasing Managers’ Index fell to 54.5 in February from 56.2 in January, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. Taiwan’s Taiex slipped 1.2 percent, South Korea’s Kospi lost 0.7 percent and Russia’s Micex Index lost 0.5 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Pratish Narayanan in Mumbai at pnarayanan9@bloomberg.net;
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net;
