BLBG: S&P 500 Futures Gain as Bonds Fall, Brent Oil Rises
Standard & Poor’s 500 Index futures gained and Treasuries declined before a U.S. manufacturing report. Brent crude and gold rallied earlier while stocks across the Middle East fell after Russian state-run news service RIA Novosti reported a missile launch in the Mediterranean.
S&P 500 futures rose 0.8 percent at 8:25 a.m. in New York. following yesterday’s Labor Day holiday in the U.S. The Stoxx Europe 600 Index swung between gains and losses. Brent climbed 0.8 percent to $115.20 a barrel, after earlier rising as much as 1.2 percent. Gold gained less than 0.1 percent after climbing 0.6 percent. Benchmark equity gauges in Turkey, Dubai, Kuwait and Abu Dhabi sank more than 1.5 percent and Israel’s TA-25 index slid 0.9 percent. India’s rupee tumbled 2.6 percent. The 10-year Treasury yield jumped six basis points to 2.85 percent.
U.S. factory output probably expanded for a third month in August, economists said before an Institute for Supply Management report today after gauges from the U.K. to China showed manufacturing is reviving. The missile launch was a test of Israel’s defense system, the country’s Defense Ministry said.
“Manufacturing is finally increasing,” said James Kinghorn, who helps oversee the equivalent of $227 billion at Scottish Widows Investment Partnership in Edinburgh. “Rising tensions in the Middle East are clearly a concern and we never know what could happen.”
The gain in U.S. index futures indicated the S&P 500 will rebound after a 3.1 percent decline in August, the worst month since May 2012. The ISM manufacturing index will post a reading of 54 for August, according to the median estimate in a Bloomberg survey. The gauge came in at 55.4 for July and 50.9 in June. The 50 level is the threshold for expansion.
Nokia Rallies
The Stoxx 600 was little changed after gaining 1.9 percent yesterday. Nokia Oyj (NOK1V) climbed 38 percent after Microsoft Corp. (MSFT) agreed to buy the company’s handset business and license its patents for 5.44 billion euros ($7.2 billion). The cost of insuring against losses on Nokia’s debt using credit-default swaps fell by a record 321 basis points to 208, according to data provider CMA.
The deal stoked speculation of more takeovers after Verizon Communications Inc. agreed to buy Vodafone Group Plc (VOD)’s 45 percent stake in their U.S. mobile venture for $130 billion.
Microsoft lost 4.2 percent in pre-market U.S. trading. Verizon slid 4.8 percent and Vodafone slipped 3.8 percent in London after its shares yesterday climbed to their highest price since 2001.
Turkey’s Borsa Istanbul National 100 Index slid 1.7 percent and the lira sank 1.4 percent versus the dollar. Dubai’s benchmark gauge lost 3.7 percent, while indexes in Abu Dhabi and Kuwait fell at least 1.7 percent.
India’s S&P BSE Sensex slumped 3.4 percent. Elevated oil prices raise costs for Asia’s third-largest economy, which imports almost 80 percent of its energy requirements.
Republican Senators John McCain and Lindsey Graham, two of the U.S. Senate’s most vocal critics of President Barack Obama’s Syria policy, urged their colleagues to back use of military force, while saying the president has yet to fully explain his strategy.
-- With assistance from Adam Haigh and John McCluskey in Sydney and Emma O’Brien in Wellington, Claudia Carpenter, Will Hadfield, Sofia Horta e Costa and Shelley Smith in London. Editors: Stephen Kirkland, Justin Carrigan, Laura Zelenko
To contact the reporters on this story: Stephen Kirkland in London at skirkland@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
