BLBG:Europe Futures Fall With Asian Shares as Copper Climbs
European and U.S. equity futures rose, while metal prices rallied as Chinese money-market rates tumbled from records. Asian shares outside Japan fell.
Euro Stoxx 50 contracts added 0.2 percent to 2,597 as of 7:09 a.m. in London. Standard & Poor’s 500 Index futures added 0.5 percent, after the measure sank 2.5 percent in New York. Copper futures gained 0.9 percent to $6,833 a metric ton after plunging 2.7 percent yesterday. Gold climbed 1 percent. The MSCI Asia Pacific excluding Japan Index lost 0.8 percent. Japan’s Topix added 0.7 percent, reversing a 2.9 percent loss, as the yen slid 0.5 percent. South Korea’s won declined 0.6 percent.
Global equities plunged the most in 19 months yesterday after Fed Chairman Ben S. Bernanke said bond buying that has fueled gains in markets around the world may be trimmed this year should risks to the U.S. economy continue to decrease. Chinese money-market rates retreated from their highes after the central bank was said to have made funds available to lenders. The nation’s stocks have slumped this week on concern about tighter liquidity.
“Markets have come off quite a bit because of the U.S. Fed statements and worries about liquidity, the Chinese economy is also a concern,” Kazuyuki Terao, Tokyo-based chief investment officer of Allianz Global Investors Japan Co., whose parent Allianz SE oversees about $2.2 trillion, said by phone. “But the fall looks overdone because fundamentals are still solid and the U.S. economy seems to be improving.”
Bond Buying
Signs of a deepening cash squeeze in China helped drag the MSCI All-Country World Index down by 3.5 percent yesterday. The gauge has lost more than 7 percent from a five-year high on May 21, the day before Bernanke raised the possibility of reducing stimulus should U.S. economic indicators improve.
About $2.4 trillion was erased from global equity values over that stretch, with indexes in Hong Kong and Japan sliding more than 20 percent into bear markets. The first cut in Fed bond purchases will come at a Sept. 17-18 policy meeting, according to 44 percent of economists in a Bloomberg survey.
MSCI’s world index added 0.1 percent, poised for a 2.9 percent drop this week. Hong Kong’s Hang Seng Index retreated 0.4 percent. The Shanghai Composite Index slid 0.3 percent and South Korea’s Kospi declined 1.5 percent.
Cash Crunch
Aluminum in London climbed 0.9 percent to $1,813 a ton, poised to snap an 11-day slump. Zinc increased 0.5 percent following a 1.6 percent drop. The LME Index of six primary base metals retreated 2.5 percent yesterday to 2,947.2, the lowest since July 2010. Spot gold added 1 percent to $1,298.4 an ounce after falling yesterday to its lowest level since September 2010. Palladium jumped 1.6 percent.
In China, the one-day repurchase rate dropped 442 basis points, or 4.2 percentage points, to 8.43 percent, according to a daily fixing compiled by the National Interbank Funding Center. That is the biggest drop since October 2007. The seven-day rate fell 227 basis points to 8.50 percent.
They touched record highs yesterday as the monetary authority refrained from using open-market operations to address a cash crunch.
“The general backdrop to world markets is OK because the U.S. economy is improving but the big caveat is China,” Mark Matthews, who helps oversee $282 billion as Singapore-based head of Asia research at Bank Julius Baer & Co., said in a Bloomberg Television interview from Hong Kong. “China is the one thing that could upset markets.”
Dollar Index
The yen dropped to 97.79 against the dollar, weakening for a fifth day. The won sank a second day versus the greenback, sliding to 1,152.38. The Dollar Index, a gauge of the U.S. currency against six peers, fell 0.2 percent today, snapping a two-day advance. The dollar is set for a weekly gain against all of its 16 major counterparts on the outlook for Fed tapering.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan gained 5 basis points to 166 basis points, according to Royal Bank of Scotland Group Plc prices. The benchmark surged 29.5 yesterday, the most since September 2011, according to data provider CMA.
The Australian dollar strengthened 0.4 percent to 92.34 U.S. cents. It touched 91.64 yesterday, the weakest level since September 2010. New Zealand’s dollar rose 0.3 percent to 77.83 cents, after declining 1.8 percent yesterday.
To contact the reporters on this story: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net; Emma O’Brien in New York at eobrien6@bloomberg.net
To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net
