BLBG: U.S. Stocks Fall as Yen Climbs on Inflation, Metals Slip
U.S. stocks fell as investors watched earnings before a report on consumer confidence. The yen strengthened as a jump in consumer prices damped speculation Japan will need to expand stimulus, while commodities slumped as China cut manufacturing capacity.
The Standard & Poor’s 500 Index lost 0.4 percent at 9:35 a.m. in New York, heading for its first weekly loss in more than a month. The Stoxx Europe 600 Index slipped 0.2 percent. Japan’s currency appreciated 0.9 percent to 98.36 per dollar, bringing this week’s advance to 2.3 percent. The S&P GSCI (SPGSCI) gauge of 24 raw materials slipped 0.4 percent, with copper down 2.3 percent and West Texas Intermediate oil heading for the biggest weekly drop in a month.
Consumer prices in Japan excluding food rose 0.4 percent in June, more than economists estimated, as Prime Minister Shinzo Abe’s policies weaken the yen and energy costs rise. China directed more than 1,400 companies in industries from steelmaking to papermaking to cut excess capacity by year-end.
“We had the inflation data in Japan which was a bit higher than expected and that’s reducing expectations of further monetary easing and giving a lift to the yen,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen.
The S&P 500 has slipped 0.6 percent so far this week, following four straight weeks of gains. The index is heading for a 4.8 percent advance for the month. The gauge fell in June, after seven successive months of gains, as investors examine economic data for clues on when the Federal Reserve will start to reduce its $85 billion of monthly bond purchases.
Market Rally
Support from central banks and better-than-estimated earnings have driven the S&P 500 up as much as 151 percent from its March 2009 low to record highs. The Fed has said economic data will determine the timing and pace of any reduction in its bond-buying.
The Fed will start trimming its purchases in September, according to a Bloomberg survey of economists. Fed Chairman Ben S. Bernanke said last week it is “way too early to make any judgment” as to whether policy makers will start tapering purchases in September. The Fed’s Open Market Committee next meets to review policy on July 30-31.
Investors are also watching company earnings reports. Of the 260 companies in the S&P 500 that have posted quarterly results so far, 73 percent have exceeded analysts’ estimates for profit and 57 percent have topped sales projections, data compiled by Bloomberg show.
Zynga, Expedia
Zynga Inc. plunged 17 percent after abandoning plans to enter online gambling and forecasting earnings that fell short of estimates. Expedia Inc. tumbled 23 percent after missing second-quarter sales and profit estimates. Starbucks Corp. jumped 6.2 percent after reporting profit that beat estimates.
A report at 9:55 a.m. New York time may show U.S. consumer confidence was little changed this month. The Thomson Reuters/University of Michigan final index of consumer sentiment dropped to 84 from 84.1 in June, according to the median estimate of 63 economists surveyed by Bloomberg. The initial reading for the measure was 83.9.
The Stoxx 600 has climbed 17 percent since European Central Bank President Mario Draghi said at a speech in London a year ago today the policy makers will do whatever is needed to preserve the euro. Spanish 10-year yields have dropped to 4.64 percent from a euro-era record 7.75 percent the day before Draghi’s speech. Italian 10-year rates dropped more than 2 percentage points in the same period, from 6.71 percent.
‘One Year’
“We are one year on from ‘whatever it takes,’” Kit Juckes, a global strategist at Societe Generale SA in London, wrote in e-mailed comments. “The euro has held together, no one has left, spreads are tighter, PMI is back up, the sun is shining and even the Spanish unemployment rate has fallen.”
The Stoxx 600 has lost 0.3 percent this week after four straight weeks of gains. LVMH climbed 4.6 percent and Kering advanced 3 percent in Paris. Deutsche Boerse AG slipped 3.3 percent as the operator of the Frankfurt stock exchange reported declining profit.
The yen rose against all of its 16 major counterparts, advancing 1 percent to 130.50 per euro. Japan’s Topix index tumbled 2.9 percent. The dollar was little changed at $1.3271 per euro, for a decline of 1 percent this week.
Emerging Markets
The MSCI Emerging Markets Index was little changed, leaving the gauge 1.3 percent higher this week. The Shanghai Composite slipped 0.5 percent. Samsung Electronics Co. (005930) lost 0.9 percent in Seoul after posting net income of 7.58 trillion won ($6.8 billion) for last quarter, versus an average analyst estimate of 8.02 trillion won.
The S&P GSCI fell for a third day and is down 1.8 percent this week, heading for the first weekly decline since June 21. WTI slid 0.4 percent to $105.11 a barrel, bringing the decline this week to 2.6 percent.
To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
