BLBG: Stocks, Oil Fall on Global Growth Concern; Gold Rebounds
Stocks dropped in Europe and Asia, while Brent crude traded below $100 for the first time since July before a report that may show German investor confidence declined. Gold touched a two-year low, before rebounding from its biggest slide in three decades, while copper rose.
The Stoxx Europe 600 Index fell 0.4 percent at 8:07 a.m. in London, while the MSCI Asia Pacific Index (MXAP) declined 0.3 percent. Futures on the Standard & Poor’s 500 Index gained 0.6 percent. Brent crude was down 1 percent at $99.53 a barrel in London. Gold rose 2 percent after plunging 9.1 percent yesterday. Copper gained 0.9 percent, palladium climbed 3.8 percent and the yen fell for the first time in four days.
Confidence in Germany’s outlook probably fell to a three- month low, economists forecast before a report today, while data showed yesterday that U.S. homebuilders turned more pessimistic and industrial output moderated in China. Deadly bombings near the Boston Marathon’s finish line contributed to a 2.3 percent drop in the S&P 500. Finance ministers and central bankers from the Group of 20 nations meet April 18-19 in Washington to discuss the global economy.
“Germany, the supporting pillar which props up the rest of the euro zone, is expected to see a significant decline in the ZEW Economic Sentiment Survey today, which may be a amplified in the current environment,” said Jonathan Sudaria, a London-based analyst at Capital Spreads, which provides trading services for retail customers.
Margin Calls
Gold tumbled this month amid speculation Cyprus will sell the metal to raise cash and the Federal Reserve will scale back stimulus efforts, curbing the outlook for inflation. Sri Lankan central bank Governor Ajith Nivard Cabraal said the decline has led to a buying opportunity.
The metal touched $1,321.95 an ounce today, the lowest since January 2011, amid speculation that some investors were selling to raise cash to cover positions acquired with borrowed money. CME Group Inc., owner of the world’s largest futures exchange, raised margin payments on gold, silver, platinum and palladium yesterday.
Bullion has dropped 18 percent in 2013, after rising for 12 years and scaling $1,900 an ounce in September 2011, as data showed the U.S. economy was improving and the Fed signaled it may rein in monetary stimulus this year. Hedge-fund manager John Paulson’s wager on gold wiped out almost $1 billion of his personal wealth in the past two trading days as the precious metal plummeted 13 percent.
“Don’t forget the market is very long gold, it has been so for a long time, we have to see how much the sell-off is,” Lee Boon Keng, head of Bank Julius Baer & Co. investment solutions group in Singapore, said by phone today. “The big number people are fearful of is $1,200.” Bank Julius oversees more than $300 billion of client assets.
Copper Rebounds
The S&P GSCI Spot Index of 24 raw materials fell 0.4 percent, headed for the lowest close in nine months. Oil in New York touched a four-month low of $86.06 a barrel today and copper in London sank to $7,085 a metric ton yesterday, the lowest since October 2011.
“Gold took a beating” because of margin calls expected on the Comex, Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said. “The Chinese number was the final nail on the head with people exiting from all commodities, including gold.”
In Germany, the ZEW Center for European Economic Research in Mannheim is due to release its index of investor and analyst expectations at 11 a.m. local time. The gauge, which aims to predict economic developments six months in advance, fell to 41 in April from 48.5 last month, according to the median of 40 projections in a Bloomberg survey.
India Rally
India’s Sensex index rose 1.3 percent today and the rupee strengthened 0.6 percent against the dollar on optimism falling prices of crude and gold will help rein in a record current- account deficit. The nation is the world’s biggest bullion importer and ships in more than 80 percent of the oil it uses.
About four stocks fell for every three that gained on the MSCI Asia Pacific Index (MXAP), with losses led by energy and raw materials companies. Glencore International Plc, the world’s biggest publicly traded commodities supplier, dropped 5 percent in Hong Kong. BHP Billiton Ltd. (BHP), the largest mining company, retreated 0.5 percent in Sydney and Cnooc Ltd., a state-owned Chinese offshore energy explorer, slid 1.6 percent.
The benchmark regional equities gauge, yesterday traded at 13.9 times average estimated earnings compared with 14 times for the S&P 500 and 12.5 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
The Asian gauge retreated yesterday from the highest level in 20 months after reports showed Chinese economic growth and industrial production expanded less than economists’ estimated.
Coca-Cola, Blackrock
Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, and South Korea’s Samsung Engineering are among companies that will report quarterly results today in Asia. In the U.S., The Coca-Cola Co., Johnson & Johnson and BlackRock Inc. are scheduled to release results.
First-quarter earnings at S&P 500 companies are forecast to decline 1.4 percent from a year earlier, based on Bloomberg earnings estimates.
The yen declined 0.8 percent to 97.53 per dollar after earlier touching 95.80, the strongest since April 5. Options traders’ bets on yen volatility were set for the biggest two-day gain this month as investors weighed how Japan will cope with pressure from Group of 20 peers on policies that have depreciated its currency.
The Australian dollar strengthened 0.5 percent, following a 1.9 percent drop against the greenback yesterday that was the biggest loss since November 2011. The Reserve Bank of Australia reiterated in the minutes released today of its meeting this month that the inflation outlook gives it room to cut borrowing costs and that the Australian dollar “remained high.”
To contact the reporters on this story: Pratish Narayanan in Mumbai at pnarayanan9@bloomberg.net; Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
