BLBG:Stocks, Oil Fall As Bernanke Damps Stimulus Speculation
Stocks fell, the euro declined and oil headed for the longest weekly losing streak in 13 years after Federal Reserve Chairman Ben S. Bernanke damped expectations for monetary stimulus and German exports dropped. U.S. Treasuries and the yen rallied.
The MSCI All-Country World Index (MXWD) dropped 0.8 percent at 9:55 a.m. in London, paring its weekly gain to 2.3 percent. Standard & Poor’s 500 Index futures lost 0.6 percent. The euro weakened 0.8 percent to $1.2466 after Spain’s credit ranking was cut three steps by Fitch Ratings. The yen strengthened against all 16 of its most-traded peers. Oil slumped 3.1 percent and the S&P GSCI gauge of 24 commodities slipped 2.2 percent.
Global stocks rallied this week as speculation mounted that policy makers would act to spur growth. Bernanke said the Fed will need to assess conditions before deciding if more measures are required to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts. German exports dropped in April for the first time this year, while Fitch downgraded Spain’s debt to within two steps of junk.
“The key issue really is around European sovereign debt and having some permanent resolution,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. that manages about $1 billion. “Even though China’s rate cut was unexpected, people are selling because it confirms in their minds that the growth outlook is problematic.”
Bob Diamond’s Goal
The Stoxx Europe 600 Index sank 1.4 percent, with 10 shares falling for every one that rose. A gauge of mining companies slumped 3.1 percent as BHP Billiton Ltd., the world’s biggest mining company, slid 3.6 percent and Rio Tinto Group retreated 4.3 percent.
Banco Santander SA, Spain’s largest lender, declined 2.3 percent after the sovereign-debt rating downgrade. Barclays Plc decreased 4 percent as the Financial Times reported that Chief Executive Officer Bob Diamond has postponed his goal of reaching a 13 percent return on equity by 2013. The newspaper cited unidentified people close to the bank. Lamprell Plc, an oil and gas rig engineer, slumped 32 percent after cutting its profit outlook for the second time in a month.
The decline in U.S. futures indicated the S&P 500 will pare its biggest weekly rally this year. Bank of America Corp., the second-largest U.S. lender by assets, retreated 1.2 percent in German trading.
Dollar Jumps
The euro, which declined 1.1 percent versus the yen, was set for its first weekly gain against the dollar in six. The Dollar Index, which tracks the U.S. currency against those of six trading partners, jumped 0.5 percent.
The cost of insuring against losses on Germany’s sovereign debt rose for a sixth day with credit-default swaps linked to bunds adding one basis point to 106 basis points, the highest since Jan. 10. The yield on its sovereign 10-year bund dropped six basis points to 1.32 percent, paring the rate’s first weekly advance in 12. The Spanish 10-year bond yield rose five basis points and swaps on government debt snapped a two-day rally, rising 11.5 basis points to 583.5.
The yield on the 10-year U.S. Treasury note dropped five basis points to 1.59 percent, with the U.S. 30-year yield sliding six basis points.
The drop this week in New York oil to $82.21 a barrel is the longest losing streak since December 1998. The GSCI’s weekly decline is the longest since March 2001. Copper tumbled 2.7 percent.
The MSCI Emerging Markets Index slumped 1.1 percent, paring its first weekly gain since March. The Hang Seng China Enterprises Index of mainland stocks slipped 1.4 percent before data tomorrow on China’s inflation, industrial output and investment. Benchmark gauges in Russia, Poland, Hungary, the Czech Republic and Taiwan declined more than 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
