BLBG: Euro Weakens to 2006 Low on Greece as Stocks, Oil Decline
The euro weakened to an almost nine-year low as a debate on Greece’s membership of the currency union deepened a selloff driven by central-bank stimulus. Stocks fell with bonds, while oil slid to its lowest level since 2009.
Europe’s shared currency declined 0.5 percent to $1.1938 at 6:20 a.m. in New York, after touching its lowest level since March 2006. Greek notes resumed losses after a rally on Jan. 2. The Stoxx Europe 600 Index lost 0.3 percent and Standard & Poor’s 500 Index futures lost 0.2 percent. The ruble slid 4.2 percent in the first day of official trading since Dec. 30. Brent crude fell 1.8 percent.
As Greece prepared for elections this month that Prime Minister Antonis Samaras said will determine the country’s euro membership, Der Spiegel magazine reported German Chancellor Angela Merkel is ready to accept a Greek exit. That represents a “very high risk” for the stability of the currency union, the Welt am Sonntag cited Peter Bofinger, an independent economic adviser to Merkel, as saying. Data today will probably show inflation slowed in Germany, bolstering the case for Mario Draghi, president of the European Central Bank, to begin bond purchases known as quantitative easing.
“It’s very hard to imagine something that can convince the market that the euro is not a selling opportunity at this juncture,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “The market continues to speculate that the ECB will start QE this month. The election in Greece probably complicates the agenda for Draghi.”
Fed Rates
Adding to pressure on the euro is the prospect that the Federal Reserve will raise interest rates this year, boosting the allure of the dollar. Intercontinental Exchange Inc.’s Dollar Index, which measures the U.S. currency against major peers, rose to its strongest level since December 2005.
The pound touched $1.5176, the lowest since August 2013, the Australian dollar reached a 5 1/2-year low and Sweden’s krona traded at the weakest level versus the dollar since June 2010.
JPMorgan Chase & Co.’s Global FX Volatility Index climbed to the highest since September 2013.
Greece’s three-year note yield rose 60 basis points to 12.78 percent. The rate touched 14.07 percent on Jan. 2. The nation’s 10-year yield increased 19 basis points to 9.44 percent, having reached 9.85 percent on Dec. 29. Italy’s 10-year rate climbed five basis points to 1.79 percent, having touched a record low of 1.737 percent on Jan. 2. Spain’s yield rose six basis points to 1.56 percent.
Oil companies declined the most among 19 industry groups in the Stoxx 600 as BP Plc and Total SA dropped more than 2.5 percent. Airlines gained, with Air France-KLM Group up 4.5 percent and Ryanair Holdings Plc climbing 2.5 percent.
China Distributors
Bayerische Motoren Werke AG fell 1.9 percent. A dealer’s group said the German carmaker agreed to pay 5.1 billion yuan ($820 million) to its distributors in China to help cover their losses after the retailers stopped ordering cars from the manufacturer.
Greece’s ASE Index lost 1.6 percent for the biggest decline among 18 western-European stock gauges.
The S&P 500 fell 1.5 percent last week as traders sold shares that rose the most in 2014 and scrutinized growth prospects after a three-year rally that took benchmark indexes to records. Professional forecasters are calling for an 8.1 percent advance in the S&P 500 this year.
The MSCI Emerging Market Index dropped 0.6 percent and a gauge of 20 developing-nation currencies fell for a second day, losing 0.3 percent, approaching a 12-year low reached last month.
Russian Stocks
Russia’s dollar-denominated RTS Index retreated 4.9 percent, with trading volumes 81 percent less than the 30-day average. The ruble-based Micex index gained 0.4 percent.
The Dubai Financial Market Index (DFMGI) tumbled 3.9 percent, Saudi Arabia’s Tadawul All Share Index lost 1.6 percent and Qatar’s benchmark gauge declined 1.9 percent.
The Shanghai Composite Index advanced 3.6 percent to the highest close since August 2009 as investors bought shares of the largest companies and developers on the first trading day of 2015. The Hang Seng China Enterprises Index of slipped 0.3 percent after gaining 3.4 percent in the previous two days.
China’s benchmark money-market rate slid by the most in almost two weeks today as cash returned to the financial system with the end of the holiday season.
Brent crude slid to $55.61 a barrel, extending its drop from the lowest close since 2009 as record supplies from Iraq and Russia bolstered speculation a global glut that drove oil into a bear market will persist this year. West Texas Intermediate crude slipped 1.3 percent to $52.
Iraq Exports
Iraq plans to expand crude exports to 3.3 million barrels a day this month, Oil Ministry spokesman Asim Jihad said by phone yesterday. The country exported 2.94 million a day in December, the most since the 1980s, he said. Russian oil production rose to a post-Soviet record of 10.67 million barrels a day in December, according to Energy Ministry data published Jan. 2.
U.S. natural gas futures rose 3.1 percent to $3.095 per million British thermal units amid speculation that a blast of arctic air may increase demand for the heating fuel. Frigid temperatures are spreading into the Midwest, Great Lakes and Northeast, the National Weather Service said in an advisory on its website today.
Gold climbed 0.4 percent to $1,193.67 an ounce as investors assessed Greece’s political crisis and the potential for economic stimulus to weaken the euro. Silver, platinum and palladium also gained.
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 editors responsible for this story: Stuart Wallace at swallace6@bloomberg.net Stephen Kirkland, Justin Carrigan
