BLBG: S&P 500 Futures Rise With European Bonds; Aluminum Gains
Standard & Poor’s 500 Index futures rose, European government bonds gained and an index of the region’s stocks held near the highest level since 2008. Aluminum increased, while Russian shares advanced.
S&P 500 futures rose 0.2 percent at 8 a.m in New York. The yield on 10-year U.K. gilts fell four basis points to 2.60 percent, while Germany’s bund yield dropped two basis points to 1.37 percent. Stoxx Europe 600 Index lost less than 0.1 percent after closing at a six-year high yesterday. Russia’s Micex Index (INDEXCF) rose 0.7 percent. The New Zealand dollar weakened 0.9 percent. Aluminum rose 0.7 percent.
German unemployment unexpectedly increased for the first time in six months, according to a report today. Joblessness across the region is one sign of what European Central Bank President Mario Draghi identified this week as “a slowly consolidating recovery” that isn’t strong enough to boost prices to a level policy makers are comfortable with.
“Expectations are building up for something big from the European Central Bank next week,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “We are chasing the lows in yield again. Until next week, yields will keep going lower.”
German 10-year bunds rose for a second day with the yields falling two basis points to 1.37 percent. The yield on 10-year gilts tumbled the most since May 15, dropping four basis points to 2.60 percent. The rate on similar-maturity Treasuries slid two basis points to 2.50 percent.
Yields Fall
Spanish 10-year yields tumbled as much as eight basis points to a record low of 2.810 percent. The yield on Italy’s 10-year bond fell seven basis points to 2.93 percent.
The Stoxx 600 was little changed after a five-day advance that took it to its highest level since January 2008.
Royal Ahold NV lost 4 percent after the owner of Stop & Shop stores in the U.S. reported first-quarter earnings that missed analysts’ estimates. Hugo Boss AG retreated 1.8 percent as its majority shareholder sold a stake in the German maker of luxury suits.
Elekta AB sank 9 percent after the maker of radiation-surgery equipment posted quarterly profit that missed projections. Osram Licht AG declined 5.6 percent after the lighting manufacturer spun off from Siemens AG cut its sales forecast for 2014.
Telecom Italia SpA, the country’s biggest phone company, gained 4.2 percent as Goldman Sachs Group Inc. added it to a conviction-buy list.
German Unemployment
A report from Germany’s Federal Labor Agency showed that unemployment in the Europe’s biggest economy unexpectedly increased, with the number of people out of work rising a seasonally adjusted 23,937 to 2.905 million in May. Economists had forecast a decline of 15,000, according to the median of 31 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 6.7 percent, the lowest level in more than two decades.
S&P 500 futures expiring in June rose 0.2 percent after the gauge climbed 0.6 percent to a record yesterday. Michael Kors Holdings Ltd. is reporting earnings today.
About 74 percent of S&P 500 companies that have posted results this season beat analysts’ estimates for profit, while 53 percent exceeded sales projections, according to data compiled by Bloomberg.
The MSCI All-Country World Index was little changed after five days of increases that sent it to its highest level since November 2007. The value of equities worldwide is near a record $63.8 trillion. The MSCI AC Asia Pacific Index (MXAP) gained 0.4 percent, following a 0.2 percent decline yesterday.
Chinese Technology
The MSCI Emerging Markets Index added 0.5 percent, advancing for the first time in three days. The gauge has climbed 4.3 percent in May, heading for its fourth monthly advance.
Lenovo Group Ltd. (992), the world’s biggest maker of personal computers, gained for a seventh day as Chinese technology shares advanced amid speculation local companies will benefit from a government dispute with the U.S. over cyber-spying.
Aluminum advanced 0.7 percent to $1,842 a metric ton, the fourth consecutive gain. Copper climbed 0.3 percent and lead rose 0.3 percent.
Comments from Chinese Premier Li Keqiang in a May 23 statement and a speech on May 26 from European Central Bank chief Mario Draghi indicating he will act to shake up price growth spurred gains in Asian and European stocks at the beginning of the week. Draghi said policy makers need to be “particularly watchful” of low inflation and officials have said they’re working on a package of possible stimulus measures for the ECB’s June policy meeting.
Russia, Ukraine
Russian stocks rose, with the Micex Index gaining 0.7 percent, and the ruble weakened 0.3 percent versus the dollar.
Ukraine’s government said it will press on with military operations against pro-Russian rebel fighters after its forces retook Donetsk airport and inflicted “significant” losses on the separatists. Ukraine’s April 2023 Eurobond rose for the 11th day, sending the yield down four basis points to 8.78 percent, the lowest since April 4. The hryvnia was little changed.
President-elect Petro Poroshenko has vowed to wipe out the rebels and re-establish order across Ukraine after winning office May 25. He must stabilize a shrinking economy and confront separatists who’ve captured swaths of the Donetsk and Luhansk regions. They’ve declared themselves independent and are fighting to join Russia, which annexed Ukraine’s Crimea peninsula in March.
New Zealand’s dollar dropped against all of its 16 major counterparts today as a measure of business confidence worsened. The kiwi fell to the lowest level since March 12, declining 0.9 percent to 84.88 U.S. cents.
The cost of insuring against losses on company debt in Europe fell to the lowest since January 2010. The Markit iTraxx Europe index of credit-default swaps on 125 companies with investment-grade ratings dropped one basis point to 66 basis points.
To contact the reporters on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net; Shelley Smith in London at ssmith118@bloomberg.net
To contact the editors responsible for this story: Stuart Wallace at swallace6@bloomberg.net Shelley Smith
