BLBG: Dollar Jumps as S&P 500 Futures Fall on Fed; German Bonds Climb
The dollar strengthened and Standard & Poor’s 500 Index futures fell as comments by Federal Reserve officials boosted speculation the U.S. is moving closer to raising interest rates. German bonds gained amid wrangling over aid to Greece.
The Bloomberg Dollar Spot Index rose 0.5 percent at 7:08 a.m. in New York, with the currency reaching its strongest level in more than seven years against the yen. Emerging-market currencies fell for a seventh day. S&P 500 futures declined 0.2 percent and the Stoxx Europe 600 Index rose 0.2 percent. Time Warner Cable Inc. rallied as Charter Communications Inc. agreed to buy the company. Germany’s 10-year bund yield declined five basis points to 0.56 percent, while Greece’s jumped 58 basis points to 11.96 percent. Chinese shares in Hong Kong climbed to a seven-year high.
Fed Vice Chairman Stanley Fischer said rate increases will be driven by data, as markets reopened following holidays in the U.S. and U.K. yesterday. They also reacted to Chair Janet Yellen’s comment last week that U.S. rates will rise this year. European Central Bank Governing Council member Ardo Hansson said an agreement on Greece is “not in sight yet,” as aid talks resumed with Finance Minister Yanis Varoufakis blaming creditors’ insistence on more austerity for the standoff.
“The dominant thing is the dollar story,” said Esther Reichelt, a currency strategist at Commerzbank AG in Frankfurt. Fed policy makers “know that low rates are not without risk. They fear that if they wait too long they’ll have to hike faster in order to prevent overheating.”
U.S. Economy
U.S. durable-goods orders probably declined in April while new-home sales increased, economists said before reports on Tuesday.
The dollar added 0.9 percent to 122.64 yen and touched 122.69 yen, its highest level since July 2007. It strengthened 0.7 percent to $1.0899 per euro, taking this year’s gain versus the 19-nation shared currency to 11 percent.
Treasuries rose amid gains for so-called core bonds, sending the 10-year yield down four basis points to 2.17 percent. Germany’s 10-year bund yield declined six basis points to 0.55 percent and Britain’s 10-year gilt yield fell five basis points to 1.88 percent. Switzerland’s declined below zero for the first time since April.
The Stoxx 600 declined for a third day. Spain’s IBEX 35 Index fell for a second day, heading for its lowest level since May 7. Portugal’s PSI 20 Index lost 1.3 percent, and Germany’s DAX Index declined 0.9 percent. Greece’s ASE Index rebounded 1.7 percent after its biggest decline since May 5.
Ryanair Gains
Ryanair Holdings Plc added 5.1 percent after Europe’s biggest discount carrier said annual profit jumped and forecast an increase in the following year.
S&P 500 E-mini futures expiring in June declined after the index rose for a third week.
Time Warner Cable jumped 11 percent in early New York trading after Charter Communications agreed to buy the company for about $55 billion in cash and stock.
The MSCI Emerging Markets Index dropped 0.3 percent and a Bloomberg gauge of 20 currencies fell 0.4 percent to a one-month low. Russia’s ruble weakened 0.7 percent against the dollar, while Poland’s zloty slid 0.8 percent versus the euro, the worst performance among developing nations.
Hong Kong’s Hang Seng China Enterprises Index advanced 2.6 percent as trading resumed after a holiday. The Shanghai Composite Index added 2 percent, taking its six-day rally to 15 percent on optimism government plans to boost foreign access to markets will spur inflows.
Volatile Stock
Goldin Properties Holdings Ltd., controlled by billionaire Pan Sutong, jumped as much as 52 percent in Hong Kong, the most since 2007. The stock tumbled 41 percent on Thursday.
Gold dropped as much as 0.9 percent to $1,195.32 an ounce, the lowest in almost two weeks, as prospects for U.S. interest rate increase helped to push the dollar to a one-month high, curbing demand for the metal. Silver and platinum declined.
Nickel climbed from a four-week low and most industrial metals rose on the London Metal Exchange as China said it’s seeking more than $300 billion of public-private investment for infrastructure projects, including a subway line in Beijing.
Brent crude futures fell 0.8 percent to $65 a barrel in London after rising Monday for the third time in four days as investors weighed flaring Middle East violence against signs that a global oil glut will persist.
