BLBG:Gold Slumps With Commodities; European Shares, Yen Gains
Gold led declines by commodities before U.S. data that may support the case for reduced monetary stimulus. European shares gained, Treasuries rose for the first time in eight days and the yen strengthened.
Cash bullion fell 2.2 percent to $1,249.00 an ounce at 8:10 a.m. in London, heading for its worst quarterly performance since at least 1920. Silver sank 3.5 percent and copper slid 1.5 percent. The Stoxx Europe 600 Index (SPGSCI) added 0.3 percent. Standard & Poor’s 500 Index (SPX) futures lost 0.2 percent. The Shanghai Composite (SHCOMP) Index dropped 0.4 percent to its lowest level since January 2009. Yields on 10-year Treasury notes dropped 4 basis points to 2.568 percent.
Reports today will confirm U.S. economic growth accelerated in the first quarter, according to analysts polled by Bloomberg, following data from house prices to consumer confidence that beat estimates. The MSCI All-Country World Index has fallen 4.8 percent in June, dragging the gauge to a quarterly loss, as the Federal Reserve said it may taper monetary stimulus and investors speculated rising Chinese funding costs will slow the world’s second-largest economy.
“The raft of figures that came out of the U.S. all pointed to a stronger growth pattern, which pushed the U.S. dollar higher,” David Lennox, an analyst at Fat Prophets, said by phone from Sydney. “That’s two nails in the coffin for gold: a stronger U.S. dollar and expectations that quantitative easing will be scaled back.”
Gold Losses
Bullion is down 22 percent this quarter and entered a bear market in April, following 12 years of gains, as investors lost faith in the metal as a store of value.
Cash silver sank to $18.9465 an ounce, its lowest level since August 2010 and taking its losses for the quarter to 32 percent. The metal is the worst performer this year on the Standard & Poor GSCI Spot Index of raw materials. Spot platinum fell 1.7 percent and palladium dropped 1.4 percent. Nickel, copper, tin and lead all fell at least 1 percent.
Crude declined 1.1 percent to $94.30 a barrel after an industry report showed stockpiles in the U.S. remained near the highest level in more than 30 years.
U.S. gross domestic product probably rose at a 2.4 percent annualized rate in the first quarter, from 0.4 percent in the previous three months, the Commerce Department will say today, according to a Bloomberg survey of economists. Fed Chairman Ben S. Bernanke said last week the Fed may curb bond buying this year and end it in mid-2014 if economic growth is in line with central bank projections.
Yen, Stocks
The yen climbed 0.4 percent to 97.42 per dollar. The Dollar Index added less than 0.1 percent to 82.61 following a five-day, 2.4 percent advance.
Almost two stocks rose for each that fell on the MSCI Asia Pacific Index, as financial companies and material producers rallied. Japan’s Topix Index (TPX) slid 0.9 percent with trading volumes 43 percent lower than the 30-day average. Australia’s S&P/ASX 200 Index (AS51) rose 1.6 percent and the Philippine Stock Exchange Index rebounded 5.7 percent after entering a bear market yesterday.
Chinese equity gauges were mixed. The Shanghai Composite’s decline took its six-day drop to 9.6 percent. The Hang Seng China Enterprises Index climbed 2.5 percent in Hong Kong from the lowest level since October 2011. The gauge has lost 17 percent this quarter, the fourth-worst performer among 94 global benchmark indexes, data compiled by Bloomberg show.
Central Bank
The People’s Bank of China has provided liquidity to some financial institutions to stabilize money-market rates, according to a release yesterday. The statement is the first public confirmation of central bank action to ease a crunch that sent the overnight repurchase rate to a record. Premier Li Keqiang is seeking to wring speculative lending out of the banking system after credit expansion outpaced economic growth.
The cost of locking in China’s interest rates fell for a fourth day, the longest run of declines since February. The one-year swap, the fixed cost needed to receive the floating seven-day repurchase rate, slid 20 basis points to 3.875 percent. The overnight repo rate dropped 40 basis points to 5.6 percent, according to a daily fixing compiled by the National Interbank Funding Center. It reached a record 12.85 percent on June 20 and has averaged 3.14 percent this year.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
