BLBG:European Futures Rise Before U.S. GDP Data; Won Gains, Oil Drops
European equity futures rose with Asian stocks before the U.S. releases economic growth data, while a record current-account surplus in South Korea helped lift the won. Oil fell after Hurricane Isaac left rigs undamaged in the Gulf of Mexico and credit risk in Asia climbed.
Futures on the Euro Stoxx 50 Index (MXAP) gained 0.2 percent as of 7:01 a.m. in London, while contracts on the Standard & Poor’s 500 Index rose 0.1 percent. The MSCI Asia Pacific Index added 0.3 percent. The Shanghai Composite Index (SHCOMP) fell to a three-year low as Chinese companies reported lower earnings. The won strengthened against all 16 major currencies and the euro traded near an eight-week high versus the dollar. Oil slipped 0.5 percent to $95.90 a barrel.
Italy plans to sell debt later amid speculation the European Central Bank is preparing a bond-buying program that may cap borrowing costs for nations in the region. Federal Reserve Chairman Ben S. Bernanke will give an Aug. 31 speech at a meeting of central bankers in Wyoming that may shed light on the outlook for U.S. monetary policy.
“Bernanke’s probably going to hold fire here, while sending an encouraging message,” said Angus Gluskie, managing director at White Funds Management in Sydney who manages more than $350 million. “Realistically we’re probably going to see him say what he’s said over the last couple of months, which is simply that they will act, but only if conditions continue to deteriorate. That’s probably neutral for the market.”
U.S. Economy
Gross domestic product in the U.S. increased 1.7 percent in the three months through June, more than the 1.5 percent estimated previously, according to economists surveyed by Bloomberg ahead of today’s report. Data released yesterday showed home prices in the world’s biggest economy rose for the first time since 2010, while consumer confidence fell the most in 10 months. The Fed signaled last week it’s ready to take further steps to spur the recovery.
The euro traded near an eight-week high versus the dollar before Italy sells six-month bills and German Chancellor Angela Merkel hosts Italian Prime Minister Mario Monti for talks in Berlin today. ECB President Mario Draghi canceled his trip to the Wyoming summit to prepare for a meeting that may see him announce details of a new bond-buying program. The euro was at $1.2558 from $1.2565 yesterday. It touched $1.2590 on Aug. 23, the strongest since July 4.
“We can apparently avert a situation where the debt crisis will trigger a collapse of the euro,” said Masato Yanagiya, head of foreign-exchange and money trading in New York at Sumitomo Mitsui Banking Corp. “Markets are expecting Spain to ask for a bailout, but it will spur the European Central Bank to undertake a measure like the Securities Markets Program,” he said, referring to the ECB’s bond-buying operation.
China Stocks
The won strengthened 0.3 percent to 1,133.47 per dollar, after touching this month’s low of 1,138.08 yesterday. South Korea’s current-account surplus widened to $6.1 billion in July from $5.9 billion in June, the central bank reported today.
Stocks in China retreated after companies reported lower profits for the first half of the year, underscoring concern the economy is slowing. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, dropped as much as 1 percent a day before reporting earnings.
The Shanghai Composite Index fell 0.9 percent, poised for the lowest close since February 2009. Air China Ltd. (601111), the country’s biggest international carrier, dropped 1.2 percent after net income slumped 77 percent in the first six months because of slowing travel demand, higher fuel costs and a decrease in the value of its stake in Cathay Pacific Airways Ltd.
Bond Risk
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment increased, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 152, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its highest close since Aug. 3, according to data provider CMA.
Oil retreated from a one-week high after Isaac made landfall in Louisiana and a report showed inventories rose the most since May in the U.S., the world’s biggest crude consumer. Flooding of refineries, caused by the hurricane, may create fuel shortages as stockpiles are “critically low,” according to Goldman Sachs Group Inc.
Gasoline fell 0.1 percent to $3.1228 a gallon, after reaching a four-month high of $3.205 on Aug. 27 as a refinery fire in Venezuela curbed output. The South American country will allow a 24-hour cooling period before resuming processing at its biggest refinery after a blaze that lasted almost four days, Oil Minister Rafael Ramirez told reporters yesterday.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
