BLBG:Stocks Fall With Commodities as Yen Advance; Gilts Drop
Stocks declined and commodities fell for a fourth day while the yen strengthened as Federal Reserve officials indicated they may pare bond purchases. U.K. gilts declined after the Bank of England tied interest rates to unemployment and raised its growth forecast.
The MSCI All-Country Index slipped 0.6 percent to 374.81 at 6:20 a.m. in New York. The Stoxx Europe 600 Index dropped 0.7 percent and Standard & Poor’s 500 Index futures lost 0.5 percent. Japan’s currency gained at least 0.6 percent against its 16 major counterparts. The 10-year gilt yield rose four basis points to 2.52 percent. The yield on 10-year Treasury notes decreased one basis point to 2.63 percent. Copper retreated 0.5 percent and gold slid to a three-week low.
The Bank of England for the first time said it won’t raise interest rates while the jobless rate remains above 7 percent. German industrial output rebounded in June, the Economy Ministry said. Federal Reserve Bank of Chicago President Charles Evans said yesterday he “would clearly not” rule out a decision to begin curbing bond purchases in September. The Bank of Japan probably won’t expand stimulus at its two-day meeting that ends tomorrow, according to all 25 economists surveyed by Bloomberg.
“There’s a cautious tone to markets developing as the recent equity rally struggles to maintain momentum,” Matthew Sherwood, the head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said by e-mail. “The sell-down sentiment seems to be one of caution, rather than panic.”
Earnings Miss
Three shares fell for every two that gained, with trading volumes 9.4 percent below the 30-day average.
Andritz AG, the world’s second-biggest maker of hydro-power turbines, slid 6.3 percent in Vienna after profit missed estimates. Rexel SA dropped 4.7 percent as Ray Investment SARL, the company’s largest investor, sold a 526 million-euro ($698 million) stake in the electrical-equipment distributor.
The decline in S&P 500 (SPX) futures indicated the U.S. gauge will extend the biggest two-day drop since June. First Solar Inc. tumbled 9.8 percent in pre-market New York trading after the largest U.S. solar-panel manufacturer reported lower second-quarter profit.
“We’ve seen good improvement in the labor market, there’s no question in my mind about that,” Evans, among the strongest proponents of the unprecedented efforts to revive the U.S. economy, told reporters yesterday in Chicago. “I’m still wanting to see greater evidence that it’s a sustainable improvement.”
Fed Comments
Dallas Fed President Richard Fisher said on Aug. 5 the central bank is closer to slowing bond buying and warned investors not to rely on stimulus. Dennis Lockhart, president of the Atlanta Fed, told Market News International that should economic growth and job creation pick up as expected, policy makers should proceed with the “removal” of asset purchases. Cleveland Fed President Sandra Pianalto is due to speak today.
The MSCI Emerging Markets Index fell 0.9 percent to a four-week low. South Korea’s Kospi index dropped 1.5 percent, led by Hyundai Motor Co. and Kia Motors Corp. (000270) after their labor unions walked out of wage talks. TPK Holding, a supplier of touch screens to Apple Inc., slumped 6.9 percent in Taipei after the company said it expects third-quarter revenue to drop by at least 15 percent. The rupee weakened 0.5 percent against the dollar.
Yen Climbs
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 2.1 percent, the most in five weeks. The Shanghai Composite Index slid 0.7 percent.
The yen rose 0.7 percent to 97.09 per dollar after advancing to 96.77, the strongest level since June 20. Japan’s currency climbed 0.9 percent per euro. The euro dropped 0.3 percent to $1.3268.
The pound erased losses against the dollar, advancing 0.2 percent to $1.5386. The BOE said it sees the economy growing 0.5 percent this quarter after expanding 0.6 percent in the previous three months. It raised its 2013 and 2014 gross domestic product growth projections to 1.5 percent and 2.7 percent from 1.2 percent and 1.9 percent in May.
The cost of insuring against losses on corporate bonds rose, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies increasing 1.2 basis points to 96.8 basis points, the highest since July 31.
The S&P GSCI (SPGSCI) gauge of 24 commodities declined 0.3 percent. Gold dropped as much as 0.8 percent to $1,273.02 an ounce, the lowest since July 17. West Texas Intermediate oil was little changed at $105.41 a barrel. U.S. stockpiles probably declined last week to a six-month low, a Bloomberg survey showed before an Energy Information Administration report at 10:30 a.m. in Washington. Oil trading was 15 percent below the average for the past 100 days, according to data compiled by Bloomberg.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
