BLBG:Europe Stocks to Follow Asian Gains as Crude Drops
Commodities declined, led by oil and gold, after Iran and world powers reached a preliminary accord on the country’s nuclear program. The yen weakened to a six-month low, while stocks rose for a third day.
The Standard & Poor’s GSCI gauge of 24 commodities fell 1.2 percent as of 8:17 a.m. in London, heading for the biggest decline in three weeks, as Brent crude, gasoline and heating oil all slumped by at least 1.5 percent. Gold fell as much as 1.5 percent to a four-month low. The MSCI All-Country index of stocks advanced 0.2 percent and futures on the Standard & Poor’s 500 Index, which capped a seventh weekly gain Nov. 22, rose 0.3 percent. Japan’s yen fell as much as 0.7 percent as Bank of Japan Governor Haruhiko Kuroda said inflation was accelerating toward his 2 percent target.
Iran agreed yesterday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, the first major crack in a decade-long deadlock. European inflation should move towards 2 percent before the euro-area’s low interest rates are reconsidered, Christian Noyer, a member of the central bank’s governing council, said in Tokyo, before data on French manufacturing confidence beat expectations. A report today is projected to show U.S. pending home sales rebounded in October.
The Iran deal “is obviously positive and hopefully we can have lower geopolitical risk,” Norman Chan, the Hong Kong-based head of investment at Calibre Asset Management Ltd., said by phone today. “It helps sentiment and growth assets such as stocks. We’re hoping to see oil prices drop to a new low.”
Fuels Drop
Brent sank 2.1 percent to $108.76 a barrel, sliding from from a six-week high and West Texas Intermediate oil dropped 1.4 percent. Gasoline fell 1.9 percent to $2.6743 a gallon, while heating oil declined 1.7 percent to $2.9906.
Gold touched $1,225.55 an ounce following last week’s 3.6 percent decline, the steepest weekly slump since September. Silver slid 0.9 percent and reached the lowest price since Aug. 8.
Oil exports from Iran will be held at about 1 million barrels a day under sanctions that remain in force after the nation and six world powers came to an agreement in Geneva, according to the White House. The measures deprived the country of more than $80 billion in revenue by cutting Iranian crude sales 60 percent since the start of 2012, U.S. President Barack Obama’s administration said in a statement.
India Advances
The S&P BSE Sensex Index rose 1.2 percent in India, which imports about 80 percent of its oil, for the biggest gain among Asian equity gauges. The end of a European Union ban on insuring tankers carrying Iranian crude will ease the process of importing the Persian Gulf state’s oil, according to Indian refiners.
The Kospi Index (KOSPI) in Seoul jumped 0.5 percent. Shares in Daelim Industrial Co., which had about 38 percent of its sales coming from the Middle East last quarter, climbed 1 percent while Samsung Engineering Co. surged 3.1 percent.
The Topix (TPX) increased 0.9 percent to 1,259.61, exceeding the highest closing level since May. Australia’s S&P/ASX 200 Index rose 0.3 percent today after the gauge slid 1.2 percent in the five days ended Nov. 22.
“There’s a risk-on sentiment in the market after the Iran deal,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services.
Yen Drops
The yen dropped to 101.92 per dollar, the weakest level since May. Japan’s statistics bureau will say the nation’s consumer prices excluding fresh food rose 0.9 percent last month from a year earlier, the strongest advance since 2008, according to the median estimate of economists surveyed by Bloomberg News before data due Nov. 29.
Japan’s economy is expected to grow above potential, BOJ head Kuroda said today in Tokyo. “We expect that the inflation target of 2 percent could be reached sometime in late fiscal 2014 or early fiscal 2015,” he said.
The economic recovery in developed markets is gathering steam with French data on manufacturing confidence beating expectations and German business confidence surging to the highest level in more than 1 1/2 years this month. Growth in the euro-area has been modest, Noyer, governor of the Bank of France said today.
Tapering Looms
Minutes of the U.S. Federal Reserve’s October meeting released Nov. 20 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated. U.S. job openings climbed to a five-year high in September, according to data Nov. 22, with a report today projected to show pending home sales rose 1.1 percent last month, following a 5.6 percent slump in September.
Copper declined for the first time in four days on concern a reduction in Fed purchases of mortgage debt would undermine demand for the metal from builders. The contract for delivery in three months on the London Metal Exchange fell as much as 0.6 percent to $7,051.25 a metric ton. The metal touched $7,133.75 earlier, the highest level since Nov. 12.
Australia’s dollar slid to 91.20 U.S. cents, the lowest since Sept. 6, and touched a five-year nadir against New Zealand’s kiwi dollar. The Reserve Bank of Australia’s deputy governor speaks tomorrow amid speculation policy makers will seek to curb strength in the currency as it trades about 20 percent higher than its 20-year average.
Thailand’s baht depreciated 0.5 percent to 31.97 per U.S. dollar as anti-government groups pledged to spread their protest to military bases, government offices and television stations today after more than 100,000 people joined rallies to oust Prime Minister Yingluck Shinawhcatra.
“Investors want to stay away from Thailand amid concern the protests will intensify or lead to violence again like last time,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Bank Ltd. in Tokyo. “Risk sentiment wasn’t strong to begin with due to the Fed’s tapering talk, and the political concern encouraged investors to take some money out from Thailand.”
To contact the reporters on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
