BLBG: European Stocks Drop as Bonds Gain; Aussie Rises on China
European stocks dropped and a gauge of emerging-market shares headed for a three-month low as government bonds rose. The Australian dollar strengthened as a China factory gauge unexpectedly advanced.
The Stoxx Europe 600 Index dropped 0.7 percent by 8:45 a.m. in London, with the MSCI Emerging Markets Index sliding 0.4 percent toward its lowest close since June. Standard & Poor’s 500 Index futures fell 0.2 percent. Copper climbed 0.3 percent after a gauge of commodities closed at the lowest since July 2009 yesterday. Australia’s dollar strengthened 0.3 percent from a seven-month low and the yen advanced 0.3 percent. Treasuries rose with bonds from the U.K., Germany, France and Australia.
The so-called flash purchasing managers index rose to 50.5 from a reading of 50.2 in August, HSBC Holdings Plc and Markit Economics said. A similar gauge in France showed a slower-than-estimated contraction, while the German indicator fell more than economists projected. About $574 billion was wiped from the value of global equities yesterday after China’s Finance Minister Lou Jiwei damped speculation leaders in Asia’s biggest economy will implement large-scale stimulus.
“There’s cyclical weakness in stocks, stemming from lower commodity prices to the propensity for a mild recession in Europe,” said Raymond Tang, who oversees about $15 billion in Kuala Lumpur as chief investment officer at CIMB-Principal Asset Management Bhd. “There are always concerns about China’s economy and credit risks, whether it’s just worries or something that will break the camel’s back. So far, they’ve been well managed.”
Inversion Reverse
Pharmaceutical companies led declines on the Stoxx 600 today, with AstraZeneca Plc (AZN) down 5.2 percent and Shire Plc plunging 6.4 percent, as the U.S. put forward rules to halt so-called inversions, threatening a host of proposed mergers.
Raiffeisen Bank International AG (RBI) plunged 13 percent, the most since 2011 as the foreign bank with most at risk in Ukraine and Russia predicted its first annual loss this year as the conflict in Ukraine causes bad-debt charges to rise faster than expected.
The Hang Seng Index, which has advanced on just four out of 15 trading days this month through yesterday, slid 0.3 percent in Hong Kong. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fluctuated after closing at a two-month low yesterday. The Shanghai Composite Index advanced 0.9 percent.
The preliminary PMI matched the highest estimates in a Bloomberg News survey of analysts, which had a median forecast of 50. Today’s report contrasts with August data that showed weaker growth and may ease pressure for stimulus that’s broader than the limited liquidity injections and expedited spending on railways that Premier Li Keqiang’s government has enacted.
Aussie Gains
The Australian dollar, known as the Aussie, climbed to 89.01 U.S. cents after slipping to as low as 88.53 cents last session, its weakest level since Feb. 4. The S&P/ASX 200 Index swung to a 1 percent gain. Canada’s dollar added 0.2 percent and South Africa’s rand strengthened 0.4 percent.
Australian government notes due in a decade climbed, with the yield sliding nine basis points, or 0.09 percentage point, to 3.56 percent. The rate tumbled seven basis points yesterday. U.S. yields fell for a third day yesterday, the longest streak this month.
Copper for three-month delivery in London climbed to $6,749.45 a ton today after finishing at the lowest since June 18 yesterday. Lead increased 0.6 percent.
Nickel climbed 0.3 percent to $17,069 after earlier plunging as much as 3.2 percent to $16,483. If prices ended below $16,800, or 20 percent below the closing high of $21,000 on May 13, the metal will have met the common definition of having entered a bear market.
Oil, Commodities
West Texas Intermediate crude oil advanced 0.2 percent to $91.08 a barrel after the China data today, while Brent added 0.3 percent to $97.21.
Raw materials prices have suffered amid signs of slower growth in China, with the Bloomberg Commodity Index closing at the lowest since 2009 yesterday. The gauge was little changed today.
The price of iron ore delivered to Qingdao in China slid a fifth day, declining 1.1 percent to $80.10 a dry metric ton yesterday, a five-year low. Iron ore is Australia’s biggest export and China is the nation’s No. 1 trading partner.
Gold for immediate delivery advanced 0.2 percent to $1,217.10 an ounce and palladium was at $806. Silver, which slumped 5.2 percent in the four days through yesterday, dropped 0.2 percent to $17.7137.
To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net
To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; Nick Gentle at ngentle2@bloomberg.net Nick Gentle
