BLBG:Euro Weakens Before ECB as Commodities Gain With U.S. Futures
The euro snapped a four-day advance against the dollar and most stocks in the region declined before the European Central Bank decides interest rates. Commodities and U.S. stock-index futures climbed.
Europe’s 17-nation currency slipped 0.1 percent to $1.3164 at 11:30 a.m. London time. The Stoxx Europe 600 Index dropped 0.1 percent. Standard & Poor’s 500 Index futures added 0.2 percent. Italy’s two-year note yield fell to a record and Spain’s dropped to the least since April 2010. Copper jumped 1.7 percent and aluminum climbed 0.8 percent.
European policy makers will cut interest rates to a record 0.5 percent today, according to 44 of 70 economists in a Bloomberg survey. ECB President Mario Draghi is scheduled to hold a press conference in Bratislava, Slovakia. The Federal Reserve said yesterday it will keep buying bonds at a monthly pace of $85 billion. France sold 7.93 billion euros ($10.4 billion) of government debt today.
“The market needs Mario to pull a very special rabbit from his hat or we see risk correct,” Kit Juckes, global strategist at Societe Generale SA in London, said by e-mail. “Weaker data in enough places is not really helping risk sentiment.”
The euro weakened 0.3 percent to 127.95 yen and slipped 0.2 percent to 84.57 British pence. Sweden’s krona dropped versus all but one of its major peers after data showed the nation’s manufacturing unexpectedly contracted in April.
U.S. Treasuries
Italy’s two-year note yield fell to as low as 1.05 percent, and Spain’s tumbled 14 basis points to 1.59 percent. The rate on similar-maturity U.S. Treasuries fell to less than 0.2 percent yesterday for the first time since Aug. 1.
France’s 10-year bond yield touched 1.69 percent, the least on record.
The ECB decision is due at 12:45 p.m. London time. Draghi holds a press conference in the Slovakian capital 45 minutes later.
Two shares fell for every one that advanced in the Stoxx 600. Sanofi, France’s largest drugmaker, dropped 0.9 percent after reporting a 34 percent decline in first-quarter profit. Andritz AG plunged 17 percent in Vienna as the second-biggest maker of hydropower turbines posted earnings that missed estimates. All western European markets except the U.K., Ireland and Denmark were closed yesterday for Labor Day.
Facebook Gains
The gain in S&P 500 futures indicated the U.S. gauge will rebound from the biggest drop in two weeks. Facebook Inc. (FB) advanced 1.4 percent in pre-market New York trading as the operator of the world’s largest social network reported first- quarter sales that topped projections.
A Labor Department release at 8:30 a.m. in Washington may show the number of people filing claims for jobless benefits rose to 345,000 last week from 339,000, according to a Bloomberg survey of economists. Manufacturing in China expanded at a slower pace in April. A gauge of euro-area manufacturing activity declined to 46.7 last month from 46.8 in March, London- based Markit Economics said today.
A report tomorrow is projected to show U.S. unemployment stayed at 7.6 percent in April, while payrolls rose 145,000, compared with an increase of 88,000 the prior month, according to the median estimates of economists in a Bloomberg survey.
The cost of insuring European corporate bonds was unchanged after rising yesterday from a two-year low, according to data compiled by Bloomberg. The Markit iTraxx Europe Index of 125 investment-grade companies was at 100 basis points.
Chinese Manufacturing
Most emerging market stocks fell as weaker growth in Chinese manufacturing and South Korean exports fueled concern that the global economy is slowing. The MSCI Emerging Markets Index was unchanged at 1038.12, as energy stocks retreated 0.8 percent. Technology shares gained the most in the index, rising 0.6 percent.
The Shanghai Composite Index fell 0.2 percent as it traded for the first time this week.
Indian stocks advanced 1.2 percent, the most among major emerging markets, gaining for a third day to the highest level since Feb. 1 on a closing basis. The Reserve Bank of India may lower its key rate by 25 basis points at a meeting tomorrow, according to the median estimate of 40 economists in a Bloomberg survey.
The Philippines peso strengthened 0.4 percent versus the dollar to a three-week high as S&P raised the country’s credit rating one step to BBB-, the lowest investment grade. S&P cited moderating inflation and declining reliance on foreign-currency debt as reasons for the upgrade, with a positive outlook.
Copper climbed to $6,904.75 a metric ton and aluminum rose to $1,836 a ton. The LME Index of six industrial metals fell 3.2 percent yesterday, the most since December 2011, as nickel and tin joined copper in a bear market. Tin fell a further 0.1 percent today and nickel rebounded 0.2 percent.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
