BLBG: Yen Strengthens Most in Month as Asian Stocks Drop, Gold Gains
June 16 (Bloomberg) -- The yen rose against higher-yielding currencies and advanced the most this month versus the dollar as Asian stocks declined before a report that may show manufacturing slowed in the U.S. Emerging-market shares fell, following the biggest drop for American equities in five weeks.
The yen advanced as much as 1.8 percent versus the dollar, the most since May 29, and was up 1.2 percent as of 10:05 a.m. in London. It strengthened 1.4 percent compared with the Brazilian real and the Australian dollar. The Standard & Poor’s 500 Index slumped 2.4 percent yesterday after reaching the most expensive level relative to earnings since October. The MSCI Asia Pacific Index lost 1.6 percent.
The Federal Reserve may say today that U.S. industrial production dropped for a seventh month in May, falling 1 percent, according to a Bloomberg survey of 73 economists. The ZEW Center for European Economic Research said its index of investor confidence rose to 44.8 in June, more than economists forecast. The euro extended gains against the dollar, rising 0.8 percent.
“We have had better-than-expected data in the recent past but we cannot say it’s a sign we are out of the woods,” said Mickael Benhaim, who manages about $32 billion as head of global bonds at Pictet & Cie Banquiers in Geneva. “We’re not yet ready for a full recovery.”
Gold rose 0.7 percent to $934.30 an ounce in London, advancing for the first time in five days. Crude oil rose as much as 1 percent to $71.34 a barrel after falling below $70 in New York for the first time in a week. Copper was little changed on the London Metal Exchange.
S&P Futures
Futures on the S&P 500 were little changed after yesterday’s slump. Europe’s Dow Jones Stoxx 600 Index was up 0.05 percent after yesterday’s 2.5 percent slide, the biggest since May 13.
The 40 percent rally in the S&P 500 from March 9 through last week left the index valued at 14.9 times its companies’ earnings, near the highest since October. The Stoxx 600 trades at 25.4 times profit, the most expensive level since March 2004, weekly Bloomberg data show.
The yen advanced to 96.35 per dollar and to 133.81 per euro after rising to 132.74 against the euro earlier in the session, the strongest level since May 28.
Treasuries were little changed, with the 10-year note yielding 3.72 percent, before the Federal Reserve buys notes due from May 2012 to November 2013 today as part of efforts to cap borrowing costs.
Credit Slump
Credit markets slumped, wiping out this month’s rally, according to the Markit iTraxx Crossover Index of credit-default swaps. The index of contracts on 45 companies with mostly high- yield credit ratings rose 6 basis points to 727, the highest since May 29, according to JPMorgan Chase & Co. An increase signals deteriorating perceptions of credit quality.
The MSCI Emerging Markets Index, a benchmark for equities in 22 developing economies, dropped 0.5 percent to the lowest since May 28, led by declines in the Philippines and Romania.
The Philippine Stock Exchange Index decreased the most in three months, dropping 3.8 percent. Romania’s BET index slid 2.8 percent to the lowest since May 29, while stocks in Abu Dhabi’s ADX General Index fell 2.8 percent, the biggest decline since April 27.
Poland’s WIG20 index slid 2 percent after European affairs minister Mikolaj Dowgielewicz said the country may have difficulties reaching its goal of entering the euro currency system in 2012.
