TM:Dollar weakens as emerging stocks rise; gold leads metals higher
NEW YORK, April 8 —The dollar weakened against its major peers, falling the most versus currencies from New Zealand to South Africa as emerging-market stocks rose toward a four- month high. Shares in Europe fell for a second day, while gold led metals higher.
The kiwi climbed 0.8 per cent to 86.72 per dollar at 10:55 a.m. in London and South Africa’s rand jumped 0.7 per cent to its strongest level since Jan. 1. The MSCI Emerging Markets Index increased 0.7 per cent, while the Stoxx Europe 600 Index slipped 0.4 per cent. Standard & Poor’s 500 Index futures were little changed after the gauge’s biggest three-day slide since January. Gold advanced 1.1 per cent.
Price swings in currency markets have tumbled to a six-year low as major central banks seek to boost growth with cheap cash and record-low interest rates, encouraging investors to seek higher-yielding assets. Aluminum gained before Alcoa Inc., the biggest US producer of the metal, reports first-quarter earnings today.
“There certainly has been more interest again in emerging markets, suggesting that many investors are again looking out for yield,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “That’s clearly a risk-on scenario that is dollar-negative.”
Dollar slides
The Bloomberg Dollar Spot Index fell 0.4 per cent to 1,011.11, weakening for a third day. It fell to 1,011.35 on March 17, the lowest level since Nov. 1.
Australia’s dollar strengthened 0.6 per cent to 93.26 US cents and reached 93.29 cents, its highest level since Nov. 21.
The yen advanced 0.4 per cent to 102.69 per dollar. Japan’s currency rose 0.2 per cent to 141.33 yen per euro. The euro gained 0.2 per cent to US$1.3763.
The JPMorgan Global FX Volatility Index dropped one basis point to 6.97 per cent, the lowest since July 2007 on a closing- market basis.
The MSCI Emerging Markets Index gained for a third day, heading for the highest close since Dec. 10. The Shanghai Composite Index climbed 1.9 per cent as trading resumed after a holiday yesterday, advancing amid speculation China will take steps to bolster economic growth. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 1.6 per cent.
Lira gains
Turkey’s lira strengthened for a third day against the dollar. The currency has rallied 4.5 per cent since local elections on March 30 showed increased support for Prime Minister Prime Minister Recep Tayyip Erdogan’s party. That’s the best performance among 31 major currencies tracked by Bloomberg worldwide. The benchmark stock gauge advance 1 per cent, headed for the highest close since Dec. 16.
Russian stocks fell for a second day, with the Micex Index dropping 0.2 per cent, while the ruble advanced 0.4 per cent against the dollar. The yield on Ukraine’s 2023 bond rose seven basis points to 9.34 per cent, after climbing 59 basis points yesterday.
Ukraine sent additional police forces into eastern regions after pro-Russian protesters seized government buildings in Donetsk, Luhansk and Kharkiv this week. The US has said there is evidence that some protesters may be paid provocateurs. Russia called on Ukraine to halt all military preparations in the east “immediately” or risk civil war.
UK natural gas, the European Union’s benchmark contract, climbed 2.6 per cent after jumping 6.5 per cent yesterday. Europe gets about a third of its natural gas from Russia, half of it through Ukraine.
Commodities climb
Gold advanced to US$1,312.10 an ounce and silver rose 1.3 per cent to US$20.12 an ounce. Aluminum increased 1.1 per cent to US$1,833.75 a metric ton, the first gain in three days. West Texas Intermediate oil climbed 0.9 per cent to US$101.30 a barrel.
The S&P 500 dropped 1.1 per cent yesterday, extending its three-day loss to 2.4 per cent. The Nasdaq 100 Index slid 4.3 per cent in three days, the most since November 2011.
The Stoxx Europe 600 Index slipped 0.1 per cent after falling 1.2 per cent yesterday, with technology shares posting the biggest declines.
Bouygues SA advanced 3.1 per cent after Le Parisien reported that Iliad SA’s Free is in talks to buy Bouygues Telecom. Nokia Oyj climbed 2.7 per cent after China approved Microsoft Corp.’s bid to acquire its handset unit.
Suedzucker tumbles
Suedzucker AG slumped 15 per cent after the maker of sugar, starch and bakery additives forecast that annual revenue and operating profit will be lower than analysts had estimated. Sports Direct International Plc slid 6.5 per cent after the Financial Times reported that founder Mike Ashley was selling a 4 per cent stake.
Wind Telecomunicazioni SpA, an Italian mobile-phone operator, is marketing €3.75 billion (RM12.17 billion) of bonds in the largest high-yield sale globally since T-Mobile US Inc.’s US$5.6 billion issue in October. The Rome-based company will use the proceeds to refinance existing debt as part of a plan Wind says will save it €200 million in annual interest costs on its more than €10 billion of debt.
The cost of insuring corporate bonds against losses fell, with the Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies decreasing 0.5 basis point to 70 basis points. — Bloomberg
