BLBG: Greek Bonds Fall as S&P 500 Futures Rise on Apple, Boeing
(Bloomberg) -- Greek bonds and stocks tumbled on concern Prime Minister Alexis Tsipras’s government will step up challenges to European policies and backtrack on austerity. U.S. equity-index futures gained following Apple Inc.’s record sales and Boeing Co.’s earnings, while oil declined.
Yields on Greek three-year notes jumped 275 basis points to 16.77 percent at 8:52 a.m. in New York, up from 10.08 percent on Jan. 23, before elections brought to power the government opposed to the austerity program. Standard & Poor’s 500 Index futures rose 0.3 percent and Nasdaq 100 Index futures climbed 1 percent. The Stoxx Europe 600 Index added less than 0.1 percent. Oil fell 2 percent in New York. Treasuries were little changed before a Federal Reserve rate decision.
Greece’s new government questioned moves to impose more sanctions on Russia, adding a foreign-policy angle to its challenge to the status quo in Europe. Investors will be looking for clues on the timing of Fed interest-rate increases after Singapore’s policy makers joined global peers in seeking to stave off deflation. Apple, Yahoo! Inc. and AT&T Inc. rose more than 1 percent after posting results.
“People might have thought in the election that the tone would change, but the tone hasn’t changed and the market is selling off,” said Michael Markovich, head of quantitative analysis at Credit Suisse Group AG in Zurich. “Bondholders expect more bad news from the Greek government.”
‘Catastrophic Clash’
Greece’s 10-year yield rose 101 basis points to 10.49 percent and the rate on five-year notes reached 13.56 percent, the highest since the nation’s debt underwent the biggest restructuring in history in March 2012. The ASE Index of stocks slid 8.6 percent, extending this week’s losses to 15 percent. National Bank of Greece SA and Piraeus Bank SA plunged at least 25 percent today.
While Tsipras promised to avoid a “catastrophic clash” with creditors and European governments, he said the new government “will not be forgiven” if it betrays its pre-election pledges to renegotiate the terms of Greece’s bailout.
Declines in Greek debt pulled down securities in the euro area’s other higher-yielding government-bond markets. Italy’s 10-year yield increased eight basis points to 1.61 percent. Portugal’s climbed 15 basis points to 2.59 percent.
Three shares declined for every two that advanced in the Stoxx 600, with trading volumes 20 percent higher than the 30-day average, according to data compiled by Bloomberg.
Electrolux Profit
Electrolux AB jumped 12 percent as Europe’s biggest appliances maker said fourth-quarter operating profit increased 20 percent. Nordea Bank AB added 6.3 percent after raising its 2014 dividend and saying quarterly net income climbed. Anglo American Plc gained 1.7 percent after reporting that coal and iron-ore output rose in the fourth quarter.
ARM Holdings Plc, the chip designer whose products power more than 95 percent of smartphones, climbing 1.6 percent.
Apple jumped 8 percent in earlier New York trading after reporting a 30 percent jump in quarterly revenue and a 38 percent surge in net income to a record $18 billion.
“Although corporate results this week have shown us that earnings season no longer runs smoothly everywhere, Apple’s record numbers have convinced the market,” said Christian Schmidt, an analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt. “Their profit is larger than any company has ever reported. It looks like we are in for a positive start to trading today.
Yahoo Climbs
Yahoo advanced 4.5 percent after announcing a spinoff of its stake in Alibaba Group Holding Ltd. It also reported fourth-quarter earnings-per-share of 30 cents, just above the 29 cents predicted by analysts. AT&T, the second-largest U.S. wireless carrier, topped profit and sales estimates.
Boeing climbed 3.1 percent after posting profit that beat analysts’ estimates and predicted that it would make good in 2015 in converting a record jetliner-order backlog into cash.
About 77 percent of the S&P 500 companies that have posted earnings this season have beaten analyst estimates, while 55 percent have topped sales projections, data compiled by Bloomberg show.
Fed officials are trying to determine whether declining oil prices, a slowdown in European growth and any fallout from the Greek elections will threaten the U.S. recovery as they considers raising interest rates.
Chair Janet Yellen told reporters after the last meeting not to expect higher borrowing costs before the end of April.
Russia Auction
Russia’s ruble weakened 1.6 percent while the Micex rose 0.1 percent. Russia sold less than its maximum target at its first debt sale after the being cut to junk by S&P.
Chinese stock-index futures slumped in late Singapore trading on speculation increased regulatory scrutiny of margin loans will spur some leveraged investors to reduce holdings.
GX FTSE China A50 Index futures for January delivery dropped as much as 5.2 percent before paring losses to 3 percent. Chinese regulators plan to start new round of checks on the margin lending businesses of brokerages as soon as this week, people familiar with the situation said. The China Securities Regulatory Commission didn’t immediately reply to a fax and e-mail seeking comment.
Petrobras Tumbles
Petroleo Brasileiro SA led stocks lower in Brazil, tumbling 8.6 percent. The state-run oil company at the center of country’s biggest ever kickback scandal failed to reach an agreement on writedowns linked to misconduct and corruption. The Ibovespa gauge slid 1.7 percent.
The Singapore dollar dropped to as low as S$1.3569 per greenback, its weakest intraday level since August 2010, before trading at S$1.3517. In its unscheduled policy statement Wednesday, the Monetary Authority of Singapore, which uses the currency as its main policy tool, said it will reduce the slope of the policy band for the city state’s dollar. It also cut the inflation forecast for 2015.
Australia’s dollar rose against all of its major peers after a report showed the country’s underlying inflation accelerated. The Aussie jumped 0.3 percent to 79.63 U.S. cents, advancing from the 78.55-cent level reached on Monday, which was the least since July 2009.
West Texas Intermediate crude slid to $45.26 a barrel before U.S. Energy Department data estimated to show that crude stockpiles rose to the highest in at least three decades. Brent declined 0.8 percent in London.
U.S. natural gas futures fell 2.6 percent to $2.858 per million British thermal units after a winter storm on the East Coast proved to be less severe than expected, with New York receiving less than a quarter of forecast snowfall.
Gold declined 0.3 percent, paring its biggest rise in a week.
