Copper rebounds on speculation of Chinese smelter intervention Yen strengthens after BOJ tweaks monetary stimulus plans Share on Facebook Share on Twitter Stocks dropped around the world, paring weekly gains, and commodities rose for the first time in seven days as the Federal Reserve’s dominance of market sentiment faded. The yen jumped after the Bank of Japan caught investors off guard with tweaks to its economic stimulus, while crude oil declined with natural gas. The Stoxx Europe 600 Index fell for the first time in four days, even as metals prices rallied on speculation Chinese smelters may build inventories of copper to support prices. Government bonds rallied as West Texas Intermediate crude dropped to the lowest in more than six years after data showed a worsening supply glut. The MSCI All-Country World Index remained on course for a weekly gain as equities withstood the Fed’s first increase in interest rates in almost a decade. “I’m sure there were a lot of people who were in it for an initial rally after the Fed,� said Ben Kumar, who helps oversee about $14 billion as an investment manager at Seven Investment Management in London. “We’re just seeing a little bit of sensibility reasserting itself.� With this week’s Fed rate decision out of the way, investors are turning their attention to when the next U.S. policy tightening will be. Richmond Fed President Jeffrey Lacker will discuss the economic outlook for 2016 at a conference Friday, the first speech from a Federal Open Market Committee member since liftoff, and futures contracts reflect expectations that there will be another increase in June. The Stoxx 600 slipped 1.1 percent at 7:21 a.m. in New York. The equity benchmark is still heading for its first weekly advance in three. Japan’s Topix sank the most in two weeks and its 10-year bond yield dropped to the lowest since January as the BOJ announced a new program of exchange-traded fund purchases and plans to extend the maturities of its government debt holdings. The yen rose all of its 16 major peers. Ukraine’s restructured dollar-denominated bonds stayed weaker after the nation defaulted on a $3 billion bond payment due to Russia on Sunday, moving the dispute closer to legal action. The yield on the country’s debt due 2025 rose two basis points to 9.65 percent, heading for a fourth week of increases. Stocks The Stoxx 600 is set for its worst December since 2002. After a 14 percent jump from its September low through end-November, the gauge lost 6.3 percent this month amid disappointing stimulus measures from the European Central Bank and a deepening of the rout in commodities. The volume of index shares changing hands was higher than the 30-day average, and a measure of European stock volatility rose 2.9 percent, before the expiration of some futures and options on stocks and indexes, known as quadruple witching, that may add to price swings. Among stocks moving on corporate news, Casino Guichard-Perrachon SA fell 2 percent, extending its two-day drop to 13 percent after short seller Carson Block accused the company of using “financial engineering� to mask a “sharply deteriorating core business.� JPMorgan Chase & Co. subsequently defended the French retailer, saying it strongly disagreed with Block. Altice NV lost 4.1 percent after the U.S. Justice department asked for a decision on the company’s bid to acquire Cablevision Systems Corp. to be deferred until a national security review can be completed. Commodities The Bloomberg Commodity Index, which measures the returns on 22 raw materials, rose 0.3 percent after recording its lowest close since March 1999. Industrial metals climbed, paring weekly losses, after a report by industry consultancy SMM that Chinese copper producers plan to hold a meeting Saturday to discuss building inventories of the metal. Smelters had already pledged to cut output to stem declines in prices to the lowest levels in six years or more. Copper rallied 2.6 percent to $4,663 a metric ton, the biggest intraday gain in a week. U.S. natural gas futures extended a decline to eight days, the longest losing streak in three years, after government data showed the smallest stockpile drop on record for the time of year. They declined 0.9 percent to $1.739 per million British thermal units. Natural gas prices are depressed across the U.S. and Europe as the world rounds out the warmest year recorded with unusually mild December weather. “The gas demand just isn’t there and the prices have plummeted,� said Zach Allen, president of Pan Eurasian Enterprises, an adviser to the gas industry. “There’s plenty of gas around and there’s no pressure on supply.� Oil in New York sank as much as 1.6 percent to $34.41 a barrel, poised for a third weekly decline, amid a deepening U.S. supply glut. Goldman Sachs Group Inc. warned of “high risks� that prices may sink further as supplies swell. Bonds The cost of insuring corporate debt rose for the first time in four days. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies added one basis point to 80 basis points. A gauge of swaps on non-investment grade companies climbed eight basis points to 333 basis points. Both indexes were little changed for the week after reversing jumps on Monday. With dwindling inflation expectations as energy prices decline, longer-dated German sovereign securities are outperforming, reducing the extra yield they offer over shorter maturities. The yield difference between 10- and 30-year German government bonds shrank to 75 basis points on Friday, the narrowest since early November. Germany’s 10-year bund yield fell five basis points to 0.55 percent, while that on similar-maturity Spanish bonds fell five basis points, to 1.69 percent, before the national elections on Sunday. Australia’s 10-year yield slid nine basis points to 2.75 percent. Emerging Markets Emerging-market stocks fell for the first time in four days, paring a weekly gain. The MSCI Emerging Markets Index dropped 1 percent, trimming its weekly increase to 2.2 percent, the best since Nov. 20. Developing-nation equities gained this week as the Fed’s assurance of a gradual rate-increase path boosted demand. Valuations for the benchmark gauge are just below their 10-year average even as analysts’ projections for earnings have fallen to a six-year low. In Johannesburg, the benchmark equity index fell 1.9 percent, paring the first weekly increase this month. Currencies The rand jumped 1 percent, the second-best performer among major currencies. The yen strengthened 1.2 percent to 121.08 per dollar. The BOJ kept its main monetary stimulus target unchanged while outlining operational changes, which include plans to lengthen the average maturities of bonds it buys to seven to 12 years from seven to 10 years currently. Governor Haruhiko Kuroda, who acknowledged in a news conference that some of the adjustments would be hard for people to understand, said they were designed to make it easier for the BOJ to maintain the current policy and didn’t constitute additional easing.

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