Aussie, ruble decline as raw-materials prices retreat WTI crude heads for first back-to-back drop in a month Share on Facebook Share on Twitter Global stocks dropped as the biggest two-day slide in commodity prices in a month reminded investors of the financial-market turmoil that marked the start of this year. The Australian and Canadian dollars weakened and the yen jumped the most in a week. Benchmark share gauges in Europe and Asia retreated from their highest closes since January, while U.S. stock index futures declined with Federal Reserve policy makers set to begin a two-day meeting. The yen strengthened against all 31 major peers as the Bank of Japan refrained from adding to record monetary stimulus at a review on Tuesday. The currencies of raw-material exporting nations slid. West Texas Intermediate oil headed for its first back-to-back decline in a month after Russia signaled Iran won’t join major producers in freezing output to manage a global glut. While world equities have staged a comeback since reaching a 2 1/2-year low in mid-February, so far there are few signs that monetary easing in China, Europe and Japan is pulling the global economy out of a slump. The BOJ’s decision to maintain policy was forecast by most economists and the authority said it’s prepared to ease further if needed to revive inflation expectations. The European Central Bank announced an expansion of stimulus last week, while the Fed will conclude a review on Wednesday and the Bank of England a day later. “Don’t forget that all the concerns we had at the beginning of the year are still pretty much there,� said Kully Samra, who manages U.K. clients for Charles Schwab Corp. in London. “It’s all about how much central banks can reassure investors. Language has become a policy tool in itself. The way the Fed communicates with the market is going to be very important.� Investors will be seeking guidance from the Fed on the trajectory of U.S. interest rates as expectations build for policy makers to add to December’s increase in borrowing costs. Fed funds futures show the probability of an increase this year is now about 78 percent, having risen from as low as 11 percent in February as U.S. economic data improved and equities rebounded. The MSCI All Country World Index fell 0.5 percent at 7:53 a.m. New York time, halting a two-day gain. The Bloomberg Commodity Index declined 0.8 percent, after sliding 0.7 percent on Monday, and the yen strengthened 0.8 percent to 112.94 per dollar. Stocks The Stoxx Europe 600 Index dropped 1 percent with commodity producers posting the biggest drop of the index’s 19 industry groups. Antofagasta Plc led miners lower, sliding more than 10 percent after abandoning its dividend and saying annual profit slumped 99 percent. Among energy-related companies, Tullow Oil Plc and Seadrill Ltd. lost more than 6 percent. Standard & Poor’s 500 Index futures declined 0.5 percent, after U.S. equities closed little changed on Monday. Investors will look to data releases on retail sales and manufacturing activity in the state of New York for indications of the health of the world’s biggest economy and the trajectory of interest rates. Deutsche Bank AG strategists including Sebastian Raedler have recommended investors stay cautious on equities because the Fed statement Wednesday may lead to a sharp re-pricing of tightening expectations. Currencies The yen appreciated 0.8 percent to 125.33 per euro after the BOJ maintained a negative policy rate and kept asset-purchase plans unchanged. While only five of 40 economists surveyed expect further easing at Tuesday’s BOJ meeting, 88 percent forecast more stimulus by the end of July. “The BOJ conceded that inflation expectations have weakened, pointing to a high near-term risk of more policy easing,� said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “The yen will test 110 per dollar before the middle of the year,� he said, a level last seen in October 2014. The currencies of South Africa, Australia and Canada all lost at least 0.7 percent amid widespread declines in the prices of commodities. The British pound fell 0.9 percent against the dollar, the most in more then three weeks, before Chancellor of the Exchequer George Osborne’s annual budget on Wednesday and the Bank of England’s policy review on Thursday. Economists in a monthly Bloomberg survey put the likelihood of a reduction in the Bank of England’s benchmark rate this year at 23 percent. Commodities WTI crude sank 2.2 percent to $36.37 a barrel, after tumbling 3.4 percent on Monday. Iran has “reasonable arguments� for not joining an alliance to cap production now, Russian Energy Minister Alexander Novak said after meeting with his Iranian counterpart. U.S. stockpiles probably expanded last week, keeping supplies at the most since 1930, analysts predicted ahead of data due on Wednesday. Copper for delivery in three months declined 0.6 percent on the London Metal Exchange after stockpiles in China spurred concern about the strength of demand in the world’s biggest user. Inventories monitored by the Shanghai Futures Exchange have hit a record high. Gold for immediate delivery was little changed at $1,235.32 an ounce, after sliding more than 1 percent on each of the last two trading days. Investors were net-sellers of gold in exchange-traded funds for only the seventh time this year on Monday. Bonds U.S. Treasuries due in a decade rose, pushing the yield two basis points lower to 1.94 percent. Pacific Investment Management Co. predicts the rate will climb as high as 2.5 percent this year as inflation accelerates and the Fed raises interest rates. Euro-area government bonds declined, led by Portuguese and Spanish securities. Portugal’s 10-year yield climbed six basis points to 2.99 percent, while Spain’s gained four basis points to 1.50 percent. The cost of insuring corporate debt against default rose for a second day. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies climbed three basis points to 74 basis points. An index of swaps on junk-rated companies rose six basis points to 321 basis points. Both gauges are still near the lowest this year. The new-issue market extended a busy start to the week. Companies looking to sell debt included steelmaker ThyssenKrupp AG, Australian shopping-mall operator Scentre Group, and Relx Group, which publishes the Lancet, Flight International and Farmers Weekly, according to separate people familiar with the offers, who asked not to be identified because they aren’t authorized to speak publicly. Emerging Markets The MSCI Emerging Markets Index retreated for the first time in four days, sliding from this year’s high as all ten industry groups declined. Shares in South Africa and Qatar dropped at least 1 percent. A gauge of 20 developing-nation currencies slid for a second day. The Russian ruble lead losses with a 1.4 percent drop versus the dollar, as falling crude prices overshadowed optimism that relations with Europe and the U.S. will improve after President Vladimir Putin ordered some forces to withdraw from Syria.

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