SF: Yen Weakens as Europe Stocks Fall, S&P 500 Futures Erase Gains
Oct. 28 (Bloomberg) -- The yen weakened after Deputy Governor Kikuo Iwata said the Bank of Japan is committed to monetary easing. European stocks fell for a second day and Standard & Poor’s 500 Index futures erased earlier gains.
Japan’s currency slid 0.2 percent to 97.65 per dollar at 8:20 a.m. in New York. The Stoxx Europe 600 Index decreased 0.3 percent, erasing earlier gains. S&P 500 futures slipped less than 0.1 percent after the gauge closed at a record high last week. Treasuries were little changed before the government sells $32 billion of two-year notes today. Spanish bonds advanced for the first time in three days.
The BOJ will continue to buy bonds until its inflation target is reached, Iwata said yesterday. The Federal Reserve, which starts a two-day policy meeting tomorrow, will probably refrain from tapering stimulus measures until March, according to a Bloomberg survey of economists. Apple Inc. is among 12 companies in the S&P 500 due to release earnings today, and the Fed is scheduled to report industrial production data for September.
“Market dynamics are still being driven by investors pushing back expectations of when the Fed may begin to taper,” said Lee Hardman, a currency strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “Given the low yielding nature of the yen and the very aggressive easing policy that the BOJ’s implementing, that makes the yen still a very attractive funding currency. We’d expect that the yen will tend to underperform.”
The yen slipped against all of its 16 major peers, weakening the most against the New Zealand and Australian currencies. It dropped for a third day against the euro, depreciating 0.3 percent to 134.79 yen. The euro was little changed at $1.3805 after touching an almost two-year high of $1.3832 on Oct. 25.
Treasury Auctions
Spain’s 10-year securities rose, pushing the yield five basis points lower to 4.11 percent. The nation will pay out 16.2 billion euros of a maturing bond on Oct. 31 and 4.9 billion euros of interest, according to data compiled by Bloomberg.
The yield on the Treasury’s 10-year note rose less than one basis point to 2.52 percent. The U.S. plans to sell $32 billion of two-year notes today, $35 billion of five-year securities tomorrow and $29 billion of seven-year debt the following day.
The Federal Open Market Committee starts a two-day meeting tomorrow after U.S payrolls rose less than projected last month and a 16-day government shutdown took at least $24 billion out of the economy. The Fed is likely to delay lowering monthly bond purchases until March, according to a Bloomberg News survey of economists conducted Oct. 17-18.
Apple, the world’s biggest technology firm, rose 0.3 percent in pre-market New York trading.
Figures today will show U.S. industrial production climbed for a second month and pending home sales were unchanged after falling from June through August, according to Bloomberg surveys of economists.
TNT Rallies
The Stoxx 600 fell as automakers retreated. PSA Peugeot Citroen and Renault SA fell more than 3 percent. TNT Express NV climbed 4.4 percent as the Dutch package-delivery company reported an 85 percent decline in third-quarter earnings and said it will set up restructuring efforts.
The Stoxx 600 trades at 14.8 times earnings, the most expensive valuation since the start of 2010, according to data compiled by Bloomberg. The gauge has rallied 14 percent this year following a 14 percent gain in 2012.
The MSCI Emerging Markets Index rose for the first time in four days, advancing 0.5 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.8 percent, rebounding from its worst week since June. Benchmark gauges in Poland, South Africa, South Korea and Taiwan increased at least 0.6 percent.
Malaysia Tax
Malaysia’s ringgit rose 0.7 percent to the highest level since June against the dollar after Prime Minister Najib Razak announced a goods and services tax to help cut the fiscal deficit. Indian stocks fell for a fifth day and the rupee weakened before a central bank policy meeting tomorrow.
Copper advanced for a third day. Japan is the fourth largest buyer of copper, after China, the U.S. and Germany, according to CRU, a London-based research company. West Texas Intermediate oil slipped 0.1 percent to $97.74 a barrel.
----With assistance from Adam Haigh in Sydney, Claudia Carpenter, Paul Dobson, Lucy Meakin, Andrew Rummer in London. Editors: Stephen Kirkland, Stuart Wallace
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
