Global stocks drop, yen jumps as commodity prices slide

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The Standard & Poor’s 500 Index pared its decline as gains in technology shares offset losses by energy and raw-material producers. Benchmark gauges in Europe and Asia retreated from their highest closes since January, as the Federal Reserve began a two-day policy meeting. Brazil and South Africa led losses in developing nations, as investors sought refuge in the yen and dollar. West Texas Intermediate oil posted its first back-to-back decline in a month after Russia signaled Iran won’t join major producers in freezing output.

While world equities have staged a comeback since mid-February, there are few signs that monetary easing in China, Europe and Japan is accelerating growth. The Bank of Japan’s decision to maintain policy comes after the European Central Bank expanded stimulus last week, while the Fed will conclude a review on Wednesday and the Bank of England a day later.

“When we see bad oil prices, we see a bad stock market,” said Mariann Montagne, who helps oversee $870 million as senior investment analyst at Gradient Investments Group. “We don’t expect any rate decision or any rate change as a result of the meeting. Janet Yellen’s comments will probably be wait and see, and I would not expect the market to trade lower with comments like that. The actions taken by the ECB are probably better for the economy, and she’s probably waiting for some of those new actions to take hold and support their economy before raising rates.”

Stocks

The Standard & Poor’s 500 Index declined 0.2 percent at 4 p.m. in New York, while the Dow Jones Industrial Average wiped out a retreat. Valeant Pharmaceuticals International Inc. plunged 51 percent to the lowest since 2011 after cutting its sales forecast. Freeport-McMoRan Inc. sank 7 percent to lead materials shares lower. Apple Inc. advanced a fifth day, jumping 2 percent and contributing the most to gains in the S&P 500 and Dow today.

Data showed U.S. retail sales dropped in February and the prior month’s gain was revised to a decline, while a separate report showed manufacturing activity in the state of New York rose in March.

“With January retail revised down, that’s going to be viewed as a negative because the question is, ‘where is the consumer and why aren’t we seeing savings from low oil prices flow through to sales,”’ said Bob Phillips, co-founder and managing principal at Indianapolis-based Spectrum Management Group Inc. “It probably causes the Fed to be much more cautious. The Fed is really the key this week, with everything else triggered off of that.”

Investors are also monitoring races for the Democratic and Republican party nominations for U.S. president, with Florida and Ohio among the five states holding votes Tuesday. Donald Trump could make his campaign harder to stop and altering the Republican Party’s composition for years to come.

The Stoxx Europe 600 Index dropped 1.1 percent with commodity producers posting the biggest drop of the index’s 19 industry groups. Antofagasta Plc fell 4.5 percent after abandoning its dividend and saying annual profit slumped 99 percent. Among energy-related companies, Tullow Oil Plc and Seadrill Ltd. lost more than 9.7 percent.

Currencies

The yen appreciated 0.6 percent to 125.69 per euro after the BOJ maintained a negative policy rate and kept asset-purchase plans unchanged. Japan’s currency strengthened 0.6 percent to 113.14 per dollar. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, added 0.2 percent.

The currencies of Brazil, Australia and Canada lost at least 0.8 percent amid widespread declines in the prices of commodities.

Commodities

U.S. crude dropped 84 cents to close at $36.34 a barrel, after tumbling 3.4 percent on Monday. Iran has “ reasonable arguments” for not joining an alliance to cap production now, Russian Energy Minister Alexander Novak said after meeting with his Iranian counterpart. U.S.  stockpiles probably expanded last week, keeping supplies at the most since 1930, analysts predicted ahead of data due on Wednesday.

Copper for delivery in three months erased declines on the London Metal Exchange after falling as much as 1.3 percent. Stockpiles in China spurred concern about the strength of demand in the world’s biggest user. Inventories monitored by the Shanghai Futures Exchange have hit a record high.

Bonds

The gap between yields on Treasury two- and 30-year debt touched the least since 2008 as traders boost wagers that the Federal Reserve will raise interest rates this year. Treasury two-year note yields climbed to a two-month high while 30-year yields were little changed as policy makers began their two-day meeting.

Pacific Investment Management Co. predicts the rate on the 10-year note will climb as high as 2.5 percent this year as inflation accelerates and the Fed raises interest rates.

Euro-area government bonds declined. Portugal’s 10-year yield climbed five basis points to 2.95 percent, while Spain’s also gained by that much to 1.51 percent.

Emerging Markets

The MSCI Emerging Markets Index retreated for the first time in four days, sliding from this year’s high as all ten industry groups declined.

Brazil’s Ibovespa was the worst performing benchmark in dollar terms among more than 90 global stock gauges tracked by Bloomberg. Local media reported former President Luiz Inacio Lula da Silva will take a cabinet post with the current government, making it harder for prosecutors to investigate corruption during his administration and that of his successor, Dilma Rousseff. Traders had bid up stocks, bonds and the currency over the past weeks on mounting speculation that Rousseff would be ousted.

Turkey’s Borsa Istanbul 100 Index fell for the first time in more than two weeks. A suicide car bomb killed at least 37 people in the nation’s capital on Sunday.

A gauge of 20 developing-nation currencies slid for a second day. The Russian ruble dropped 1.7 percent versus the dollar, as falling crude prices overshadowed optimism that relations with Europe and the U.S. will improve after President Vladimir Putin ordered some forces to withdraw from Syria.

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