BS: Brent Sinks Below $100 on China Data; U.S. Stocks Retreat
Brent crude fell below $100 for the first time since June 2013 as China trade data fueled concerns of a surplus. U.S. stocks fluctuated near a record, while the pound weakened the most in more than a year against the dollar on concern Scotland will vote for independence.
Brent crude retreated 1.2 percent to $99.59 a barrel at 9:34 a.m. in New York. The Standard & Poor’s 500 Index fell 0.2 percent after a fifth week of gains took it to an all-time high. Yields on 10-year Treasuries declined three basis points to 2.43 percent. The British currency lost 1.1 percent to $1.6141 and the Stoxx Europe 600 Index slid 0.6 percent.
China’s trade surplus climbed to a record in August, as imports fell for a second month. The percentage of voters in favor of Scotland breaking from the U.K. rose to 51 percent less than two weeks before the referendum, according to a YouGov Plc poll for the Sunday Times. A cease-fire in Ukraine is being tested by reports of fighting.
VIDEO: Brent Crude Falls Below $100 Per Barrel: Bloomberg Brief
The S&P 500 fell 0.2 percent after a five-week rally pushed the benchmark gauge to an all-time high. The index climbed 0.2 percent last week, completing its longest streak of weekly gains this year, as investors speculated weaker jobs growth will keep the Federal Reserve from raising interest rates. Bets on continued Fed support got a boost on Sept. 5 as data showed the economy added fewer jobs than estimated in August and the unemployment rate fell to 6.1 percent.
U.S. Bonds
Ten-year Treasury (USGG10YR) yields dropped to 2.439 percent. The notes halted a slide that sent them to their biggest weekly loss since March. U.S. government securities are heading for their biggest annual advance since 2011, supported by demand due to unrest in Ukraine and the Middle East.
The U.K. currency, the fourth most traded globally, dropped to as low as $1.6103 today, the least since Nov. 21, and weakened 1.1 percent to 80.226 pence per euro.
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Shocked into action by a poll showing the Yes campaign ahead for the first time this year just 10 days before a referendum on independence, all three main U.K. parties said they would cede more control over the levers of policy making to the Scottish Parliament in Edinburgh. Scots nationalist leader Alex Salmond dismissed the move yesterday as a “bribe” that wouldn’t sway voters in the Sept. 18 ballot.
“There seems to be plenty of scope for further pound declines, given the pronounced degree of uncertainty and unknowns related to a breakup,” Derek Halpenny, the head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in e-mailed comments. “A ‘Yes’ victory is still hardly priced as this only has become a focus since the middle of last week, when we had the first surprise poll. I see little upside for the pound now through to Sept. 18.”
U.K. Gilts
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers including the pound, added 0.2 percent today after falling 0.1 percent Sept. 5. The gauge climbed 0.9 percent last week, its third consecutive weekly advance.
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The yield on 30-year U.K. gilts climbed to 3.123 percent. Two-year notes rallied, pushing yields six basis points lower to 0.746 percent, amid speculation a Scotland breakaway would encourage the Bank of England to keep interest rates lower for longer.
The Stoxx 600 fell 0.7 percent for a second day of losses as investors weighed valuations and the FTSE 100 Index sank 1 percent for the biggest decline among 18 western-European markets.
Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, the two banks that lend the most in Scotland, slid more than 2 percent each. Oil and gas producers posted the second-biggest loss of the 19 industry groups on the Stoxx Europe 600 Index.
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$100 Crude
Brent crude slipped as much as 1.1 percent in London to $99.72 a barrel in London. The last time it traded below $100 was June 24, 2013. West Texas Intermediate for October delivery lost as much as 95 cents, or 1 percent, to $92.34 a barrel in New York, the lowest since January.
China’s slowing imports reinforced signs of a surplus supply. The country’s trade surplus climbed to a record in August as exports rose on the back of increased shipments to the U.S. and Europe, while imports fell for a second month as a property slump hurt domestic demand.
The Hang Seng China Enterprises Index increased 0.4 percent, paced by gains in China Telecom Corp. Trading venues in mainland China and South Korea are closed today. Markets in Hong Kong are closed for a holiday tomorrow, when the mainland resumes trading. South Korea doesn’t reopen until Sept. 11, with markets shut for the Harvest Moon festival. Taiwan is also shut today.
