BLBG: S&P 500 Futures Rise as Gold Rebounds, Yen Weakens
U.S. equity-index futures rose, the yen weakened and Treasuries fell as gold rebounded from its biggest slump in three decades. European stocks declined for a third day and Brent crude dropped below $100 a barrel for the first time since July.
Standard & Poor’s 500 Index futures gained 0.6 percent at 6:40 a.m. in New York, signaling the benchmark gauge will rebound from the biggest drop in five months. The Stoxx Europe 600 Index fell 0.7 percent. Japan’s currency dropped at least 1 percent against all 16 of its major counterparts, falling most versus the New Zealand dollar and the Korean won. Treasury 10- year note yields climbed four basis points to 1.72 percent, the first increase in four days. Gold jumped 3.2 percent, palladium advanced 4.7 percent and aluminum gained 1.4 percent.
Gold rallied from a two-year low after the biggest selloff since 1983 as Sri Lankan central bank Governor Ajith Nivard Cabraal said the decline has led to a buying opportunity. Goldman Sachs Group Inc., Johnson & Johnson and Coca-Cola Co. are among U.S. companies due to report earnings before the start of trading today. Confidence in Germany’s outlook fell more than economists forecast in April, according to the ZEW Center for European Economic Research.
“The outlook for gold for us is really positive in the long term,” Catherine Raw, a fund manager in London at BlackRock, which oversees about $3.8 trillion globally, said in an interview today on Bloomberg Television with Francine Lacqua. “The probability of inflation over the next five years is higher not lower than it was last year. Other things such as cash losing money, the Cyprus event, savings being targeted means people are looking for alternatives.”
Gold Climbs
Gold climbed to $1,391.15 an ounce after falling 14 percent the past two days. The drop was triggered by speculation that Cyprus would sell its gold reserves, leading other European central banks to follow suit, Goldman Sachs said in a report today.
Gold is down 28 percent from its record high in September 2011. During its 12-year rally, gold has gained 515 percent, compared with the S&P 500’s 8 percent decline. On an inflation- adjusted basis, it’s 43 percent lower than the record high.
Silver climbed 4.1 percent to $23.6975 an ounce today, after tumbling 18 percent over two days. Palladium advanced to $684.25 an ounce and aluminum gained to $1,892.75 a metric ton. Palladium declined 11 percent in the past two days and platinum dropped 8.5 percent.
Boston Explosion
The S&P 500 sank 2.3 percent yesterday. The index extended losses during the day as explosions near the finish line of the Boston Marathon killed three people and left at least 128 in the hospital.
BlackRock Inc., the world’s largest asset manager, reported adjusted earnings of $3.65 per share in the first quarter, compared with an estimate of $3.57.
Of the 33 companies in the U.S. gauge to have reported results this season, 70 percent topped analysts’ profit estimates and 58 percent exceeded revenue projections, according to data compiled by Bloomberg. First-quarter earnings at S&P 500 members are forecast to decline 1.4 percent from a year earlier, estimates compiled by Bloomberg show.
The Stoxx 600’s decline extended the drop over the past three days to 2.2 percent. Michael Page International Plc slid 6.5 percent, the most in nine months, after the U.K. recruiter reported lower profit. LVMH Moet Hennessy Louis Vuitton SA (MC) retreated 3.4 percent as revenue growth slowed. Danone rallied 3.8 percent to a five-year high as the food company reported first-quarter sales growth that beat analysts’ estimates.
Emerging Markets
The MSCI Emerging Markets Index (MXEF) rose for the first time in three days, adding 0.2 percent. Benchmark gauges in South Africa, Indonesia and India gained at least 0.9 percent, while indexes in Turkey and the Philippines lost at least 0.6 percent.
India’s Sensex index jumped 2 percent, the most since September, on speculation declining commodity prices will help the government curb a record current-account deficit.
Brent futures slid 0.9 to $99.77 after falling to as low as $98 a barrel in London, while West Texas Intermediate crude retreated 0.5 percent to $88.28 a barrel.
The yen declined 1.1 percent to 127.54 per euro after surging 3.5 percent during the previous two days. Japan’s currency dropped 1.1 percent to 97.84 per dollar. The dollar fell 0.3 percent to $1.3073 per euro, after gaining 0.6 percent yesterday. New Zealand’s dollar strengthened for the first time in three days, climbing 0.7 percent to 84.65 U.S. cents.
Treasury Spread
The difference between yields on 10-year Treasury notes and similar-maturity Treasury Inflation Protected Securities slid to as low as 2.40 percentage points today, the least since Nov. 29, before a report today that economists predict will show consumer prices stagnated in March.
German 10-year bund yields rose three basis points to 1.27 percent and the rate on similar-maturity Italian bonds fell three basis points to 4.31 percent.
The cost of insuring corporate bonds in Europe rose for a third day, according to data compiled by Bloomberg. The Markit iTraxx Europe index of 125 companies with investment-grade ratings added 1.5 basis points to 113 basis points, the highest level in a week.
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;
