BLBG:Stocks Decline as Portugal Yields Jump While Oil Climbs
Stocks fell around the world, led by Portugal as the nation’s 10-year bond yield surpassed 8 percent for the first time since November after two ministers quit the government. Crude oil rose above $100 a barrel while the euro and Australian dollar weakened.
The MSCI All-Country World Index dropped 0.8 percent to 355.02 at 8:55 a.m. in London. Portugal’s benchmark equity gauge tumbled 5.9 percent and the 10-year bond yield rose as much as 130 basis points to 8.02 percent. Standard & Poor’s 500 Index (SPX) futures slipped 0.4 percent. The 10-year Treasury yield fell five basis points to 2.42 percent. West Texas Intermediate crude advanced 1.7 percent to $101.33 a barrel. The Aussie tumbled against all of its 16 major peers. The euro slid to its weakest level in more than a month versus the dollar.
The resignation of two ministers signaled Portugal will struggle to implement further budget cuts as its bailout program enters the final 12 months. Oil climbed on concern political turmoil in Egypt will disrupt shipments in the Suez Canal. Investors are awaiting data on U.S. jobless claims and payrolls due this week to gauge prospects for the Federal Reserve to pare asset purchases.
“Portugal’s political crisis clearly expresses austerity fatigue,” Holger Schmieding, an economist at Berenberg Bank in London, said in a report. “If Portugal were to turn away decisively from the ‘tough love’ politics of austerity and reform, it could pose a major dilemma. Softening the bailout conditions too much could invite other countries to also slacken their efforts. But not softening the bailout conditions at all could raise the risk of failure in Portugal.”
Sixteen people were shot dead in Egypt overnight, according to State TV Nile News, after the army gave President Mohamed Mursi an ultimatum to restore order. Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which 2.24 million barrels a day of oil was shipped from the Red Sea to Europe and North America in 2011, according to the EIA.
To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net;
