BLBG:S&P 500 Futures Gains on Yellen as Yen, Copper Decline
Standard & Poor’s 500 Index (SPX) futures gained, signaling the equity gauge will rebound from a one-month low, after the White House said it will nominate Janet Yellen to lead the Federal Reserve, offsetting concern about a standoff over U.S. budget talks. The yen weakened and copper declined.
S&P 500 futures rose 0.4 percent at 10:30 a.m. in London after the gauge’s biggest two-day loss since June. Alcoa (AA) Inc. advanced after earnings beat estimates. The Stoxx Europe 600 Index erased earlier declines. Japan’s currency fell 0.6 percent to 97.44 per dollar. The pound slid 0.7 percent to $1.5973 after U.K. industrial production unexpectedly dropped in August. German government bonds gained while corporate bond risk increased for a third day. Copper retreated 0.7 percent.
Yellen, the current Fed vice chairman and an architect of its unprecedented stimulus program, will be nominated to succeed Ben S. Bernanke, a White House official said in an e-mailed statement. The announcement comes as President Barack Obama and Republican lawmakers continue to tussle over reopening the government and raising the debt ceiling, which had sent Treasury bill rates to the highest since October 2008. The Fed will today release minutes from its Sept. 17-18 meeting, at which officials unexpectedly maintained stimulus.
“Generally people feel Yellen will take a line that’s not dissimilar from Bernanke, which will be reasonably dovish and accordingly supportive for markets,” said Angus Gluskie, managing director at White Funds Management Ltd. in Sydney, where he helps manage about $550 million. “Markets don’t like indecision and bickering by the government.”
The gain in S&P 500 futures indicated the gauge will rebound from a 2.1 percent slide over the past two days. The index lost 1.2 percent yesterday, the biggest drop in six weeks.
Alcoa Earnings
Alcoa climbed 3.7 percent in German trading after the largest U.S. aluminum producer reported better-than-estimated earnings. Third-quarter net income excluding plant-closing costs and other one-time items was 11 cents a share, New York-based Alcoa said late yesterday, beating the 5-cent average of 17 estimates compiled by Bloomberg.
Obama will announce the Yellen nomination tomorrow Washington time at 3 p.m. The President turned to her after the other leading candidate, former Treasury secretary and White House economic adviser Lawrence Summers, withdrew from consideration.
As a top deputy to Chairman Bernanke, whose term expires Jan. 31, Yellen supported the central bank’s bond buying programs and was a driving force behind a new strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.
Debt Deadlock
Obama told reporters in Washington yesterday the U.S. economy risks a “very deep recession” should Congress not raise the $16.7 trillion debt limit. In response, House of Representatives Speaker John Boehner insisted on immediate negotiations with the President, rejecting Obama’s position that he’ll only talk once the partial shutdown is ended and the debt ceiling raised.
The MSCI Emerging Markets Index fell from a two-week high, slipping 0.4 percent. The Hang Seng China Enterprises Index in Hong Kong decreased 0.3 percent while the Shanghai Composite Index climbed 0.6 percent. India’s S&P BSE Sensex increased 0.8 percent, reversing earlier losses after the trade deficit narrowed to the lowest level in 30 months.
The cost of insuring against losses on corporate bonds rose for a third day. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies increased 0.4 basis point to 101.1 basis points, the highest since Sept. 30.
Silver for immediate delivery fell 0.2 percent after climbing to the highest level since Sept. 20 yesterday. Platinum dropped 0.3 percent today and palladium retreated 0.5 percent while gold slipped 0.1 percent. Wheat futures for delivery in December touched a 15-week high of $6.9975 yesterday as rain in Russia and snow in Ukraine may cut output, and were at $6.9375 today.
European Union carbon emission permits for December dropped as much as 3.5 percent to 4.70 euros a metric ton, the lowest since Sept. 4, after the European Investment Bank said yesterday it planned to resume sales of allowances from November.
----With assistance from Emma O’Brien in Wellington, Yoshiaki Nohara in Tokyo, John Deane, Paul Dobson, Rupert Rowling, Andrew Rummer and Shelley Smith in London. Editors: Stephen Kirkland, Mark Gilbert
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
