BLBG:Yen, Oil Rally as European Stocks Climb to One-Month High
The yen strengthened as the Bank of Japan started a two-day meeting and the dollar weakened before the release of Federal Reserve minutes. European stocks fell and the winning streak in commodities extended to the longest in more than nine months.
The yen rose 1 percent to 100.11 per dollar by 11:05 a.m. in London. The U.S. Dollar Index, a measure against six major trading partners, dropped 0.3 percent. The Stoxx Europe 600 Index fell 0.2 percent and S&P 500 Index (SPX) futures declined 0.1 percent. The Standard & Poor’s GSCI gauge of 24 raw materials advanced for a seventh consecutive day. Italian bonds fell, pushing the 10-year yield five basis points higher to 4.46 percent, after Standard & Poor’s cut the nation’s credit rating.
The BOJ will leave its bond-buying program unchanged, according to all 20 economists in a Bloomberg News survey. Minutes of the Federal Open Market Committee’s June 18-19 meeting will be released today and Fed Chairman Ben S. Bernanke will speak at a National Bureau of Economic Research conference. Asian stocks pared gains after China’s exports and imports unexpectedly contracted in June.
“Fed tapering is a big theme that’s going to dominate volatility and returns over the coming weeks and months,” Bruno Del Ama, chief executive officer of Global X Funds, a New York-based exchange-traded fund company, said in a Bloomberg Television interview. “The markets are going to be very focused with regards to the speed of the tapering as well as when it will start.”
Luxury Goods
The Stoxx Europe 600 Index rose earlier to its highest level since June. Burberry Group Plc (BURBY) jumped 4.5 percent after the U.K.’s largest luxury-goods maker posted retail sales for its fiscal first quarter that exceeded analysts’ estimates. Mining companies led European shares lower. BHP Billiton Ltd. fell 1.2 percent and Rio Tinto Group 1.4 percent.
The cost of insuring against losses on corporate bonds increased, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies rising 2.5 basis points to 109, the highest since July 8.
The S&P 500 closed within 1 percent of a record high yesterday after Alcoa Inc. started the U.S. earnings season with results that beat analysts’ estimates. Yum! Brands Inc. reports earnings today, while JPMorgan Chase & Co. and Wells Fargo & Co. are among companies releasing results this week.
The U.S. benchmark has recovered all its losses following a 4.8 percent drop from June 19 to 24, triggered when Bernanke said the central bank may reduce its $85 billion of monthly bond-buying this year and end the program in 2014 as economic risks subside.
China Trade
About five stocks rose for every four that fell in the MSCI Asia-Pacific Index, which advanced 0.8 percent. The Shanghai Composite Index jumped 2.2 percent, gaining the most in almost four months, on speculation the government will take measures to support economic growth. There’s some speculation about a cut in the reserve-requirement ratio, said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million.
Data today showed China’s exports fell 3.1 percent in June from a year earlier, compared with the median estimate of a 3.7 percent gain in a Bloomberg News survey. Imports declined 0.7 percent after a 0.3 percent drop in May. China’s economy probably expanded 7.5 percent in the three months ended June 30, according to the median estimate in a Bloomberg News survey before data due July 15. That’s down from 7.7 percent in the first quarter and 7.9 percent in the last three months of 2012.
Copper Imports
The S&P GSCI advanced 0.5 percent to the highest since April 3. Gasoline gained 1.3 percent and nickel jumped 1.1 percent. West Texas Intermediate oil rose 1.2 percent to $104.73 a barrel and copper climbed 0.7 percent to $6,778.50 a metric ton. China’s copper imports rose to a nine-month high in June.
Treasuries were little changed, with the 10-year yield at 2.63 percent, before the government sells $21 billion of the securities today. Spain’s 10-year yield rose 10 basis points to 4.83 percent, climbing for a fourth consecutive day.
Japan’s Topix declined from a seven-week high as the yen strengthened against all its 16 major peers. Thirteen of 20 economists in a Bloomberg News survey completed July 8 saw no extra loosening by the BOJ in the next six months, a reversal from a poll in May.
BOJ Governor Haruhiko Kuroda and his fellow policy makers will discuss strengthening their assessment of the nation’s economy by using the word “recover” for the first time in more than two years, according to people familiar with the central bank’s discussions.
Japan’s currency tumbled 21 percent in the past 12 months, the worst performer among 10 developed nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 2.3 percent and the euro strengthened 7.6 percent.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
