SF: Commodities Drop on China Inflation as Stocks Pare Declines
Jan. 11 (Bloomberg) -- Commodities dropped as China’s inflation topped economist estimates, increasing concern officials may curb economic stimulus. European stocks pared declines and U.S. equity-index futures were little changed.
The Standard & Poor’s GSCI gauge of 24 commodities fell 0.7 percent at 7 a.m. in New York, with oil losing 0.7 percent and copper down 0.4 percent. The Stoxx Europe 600 Index slipped 0.1 percent, after retreating as much as 0.4 percent. Standard & Poor’s 500 Index futures slid less than 0.1 percent and the Shanghai Composite Index sank 1.8 percent. Italy’s two-year yield was little changed at 1.36 percent after a debt sale. Derivatives signal there’s a 65 percent chance of Cyprus defaulting after it was downgraded.
China’s inflation quickened to a seven-month high in December, the National Bureau of Statistics said today after exports and credit growth underscored the strength of an economic rebound. The U.S. trade deficit probably narrowed in November as exports climbed, economists said before a Commerce Department report today.
Chinese authorities “don’t want unsustainable high growth rates with surging inflation,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said by e-mail today. “Hence monetary expansion and the ongoing stimulus will still be limited and very cautious.”
Crop Report
Oil fell to $93.19 a barrel in New York and Brent crude slipped 1.1 percent to $110.63 a barrel in London. China is the biggest buyer of industrial metals and energy. Crop prices fell before the U.S. Department of Agriculture’s monthly supply and demand report, due at 12 p.m. in Washington. Soybeans dropped 0.9 percent and corn declined 0.3 percent.
The Stoxx 600 has fallen 0.2 percent this week. A gauge of basic-resources companies led declines among 19 industry groups today, slipping 1.4 percent, the most in a week on an intraday basis.
Cap Gemini SA, France’s biggest computer-services company, rose 3.4 percent to lead gains in the index today after rival Infosys Ltd. raised its full-year sales forecast. Getinge AB sank 9.8 percent, the biggest decline since March 2009, as the Swedish maker of sterilization systems said demand for its products weakened during the fourth quarter.
The S&P 500 has increased 0.4 percent this week, pushing the U.S. index to a five-year high.
Chevron Corp. climbed 1 percent in German trading today after the second-biggest U.S. energy company said earnings increased from the third quarter as rising prices blunted the impact of declining oil output. The San Ramon, California-based company is scheduled to report full results on Feb. 1.
Wells Fargo
Wells Fargo & Co. advanced 0.3 percent as the largest U.S. mortgage lender prepared to announce results before the start of trading today.
The cost of insuring Cyprus sovereign debt rose after Moody’s Investors Service cut the nation’s credit rating three steps to Caa3, citing the government’s projected debt load from recapitalizing the banking system. Credit-default swaps protecting $10 million of debt for five years were quoted at $3.55 million in advance and $500,000 a year by data provider CMA, compared with $3.52 million upfront yesterday.
The yield on 10-year Treasuries was little changed at 1.90 percent. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said yesterday the central bank may not be doing enough to combat unemployment and meet its goal for price stability. Policy makers may have difficulty tying bond purchases to inflation and the unemployment rate, as the Fed has with its zero-rate policy, St. Louis Fed President James Bullard said in Madison, Wisconsin.
The MSCI Emerging Markets Index slipped 0.2 percent today, heading for its first weekly drop in two months. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 0.7 percent. Hyundai Motor Co., South Korea’s biggest automaker, led the Kospi index 0.5 percent lower after the won gained to a five-month high against the dollar. Infosys Ltd., India’s second-largest software exporter, rallied 16 percent, the most in three years, after raising its sales forecast.
--With assistance from Corinne Gretler in Zurich, Claudia Carpenter, Emma Charlton, Paul Dobson, Andrew Rummer, Michael Shanahan and Steve Voss in London. Editors: Stephen Kirkland, Stuart Wallace
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
