BS: Yen Drops to 2008 Low as S&P 500 Futures Advance; Gold Increases
The yen weakened to a five-year low while U.S. index futures and European stocks advanced before next week’s Federal Reserve meeting that may give investors clues about the timing of cuts in economic stimulus. Gold rose.
Japan’s currency slipped 0.1 percent to 103.52 per dollar at 7:45 a.m. in New York and reached 103.92, the weakest level since October 2008. Standard & Poor’s 500 Index futures gained 0.4 percent after the gauge closed at a one-month low. The Stoxx Europe 600 Index rose 0.2 percent. Gold advanced 0.3 percent and U.S. natural gas dropped from a two-year high.
Stocks worldwide are heading for their biggest weekly decline since August as signs of improvement in the U.S. economy spurred concern the Fed will rein in stimulus at its Dec. 17-18 meeting. European Central Bank Vice President Vitor Constancio and executive board members Benoit Coeure and Peter Praet are speaking today.
VIDEO: Yen at 105 Versus Dollar `Not Out of Question'
“Fed tapering is clearly coming,” said Adam Cole, head of Group-of-10 currency strategy at Royal Bank of Canada in London. “Not necessarily next week, but I think the latest anybody is expecting in surveys now is March, and at the same time there is perceived to be a risk of the Bank of Japan easing again early next year.”
The yen is on pace to complete a seventh weekly decline as the yield advantage of Treasuries over Japanese debt approached the widest since April 2011. The currency retreated as much as 0.5 percent to 142.83 per euro, the weakest since October 2008.
U.S. Treasuries
The U.S. 10-year yield held at 2.88 percent, having risen 13 basis points this month. Its premium over similar-maturity Japanese bonds was 2.18 percentage points, near the 2 1/2-year high of 2.24 reached on Dec. 5.
VIDEO: Mizuho's Antos on China Banks, Volcker Rule
The Australian dollar headed for its longest stretch of weekly losses since 1985, as Governor Glenn Stevens intensified his efforts to talk down the currency by signaling a weaker Aussie is preferable over lower interest rates to help spur the nation’s slowing economy. The Aussie touched a more-than-three month low of 89.63 U.S. cents.
The Fed will probably start reducing its $85 billion of monthly bond purchases at next week’s meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent in a Nov. 8 poll. A tapering of the Fed’s asset purchases would curb the supply of cheap dollar financing that has spurred demand for higher-yielding assets globally.
Tapering Prospect
“With the prospect of tapering only days to weeks away, the global effect is starting to ramp up,” said Evan Lucas, Melbourne-based market strategist at IG Ltd. “It will cause short-term vibrations.”
S&P 500 futures expiring in March rose, signaling the index may increase after three days of declines. The gauge has lost 1.6 percent this week and is on pace for its biggest drop since August. Still, it has risen 24 percent this year and is heading for its biggest annual advance since 2003.
Shares worldwide have fallen this week. The MSCI ACWI Index has lost 1.5 percent, and the MSCI Asia Pacific Index slipped 1.3 percent. The Stoxx 600 closed at a two-month low yesterday and has dropped 1.8 percent this week.
AstraZeneca Plc gained 2.1 percent after a diabetes pill from the company and Bristol-Myers Squibb Co. won the backing of U.S. advisers. Sandvik AB climbed 2.8 percent after Deutsche Bank AG recommended buying the stock.
RSA Insurance Group Plc (RSA) lost 17 percent after its chief executive officer resigned as an investigation into accounting practices at its Irish unit forced the insurer to increase reserves. PSA Peugeot Citroen slumped 9.9 percent as General Motors Co. said it is selling its entire stake in the French carmaker.
Adobe, Anadarko
In early U.S. trading, Adobe Systems Inc. jumped 7.2 percent as the company attracted more subscribers to its online software in the fourth quarter than some analysts had projected. Anadarko Petroleum Corp. tumbled 11 percent as a judge ruled it may have to pay as much as $14 billion in a case related to the spinoff of Tronox Inc.
The MSCI Emerging Markets Index fell 1.1 percent this week with benchmark gauges in Thailand and India slumping. The SET Index in Bangkok dropped 1.1 percent today to its lowest level in more than three months. India’s S&P BSE Sensex Index fell 1 percent, taking its four-day retreat to 2.9 percent.
Foreign investors appear to be selling more Thai equities on concern about a deadlock in domestic politics, said Athaporn Arayasantiparb, head of research at UOB Kay Hian Securities (Thailand) in Bangkok.
